Federal Reserve Interest Rate Cut
(Reuters) – The Fed finally cut its interest rate by an oversized 50 basis points (bps) in its Sept 17-18 meeting that Federal Reserve Chair Jerome Powell said was meant to show policymakers’ commitment to sustaining a low unemployment rate now that inflation had eased.
In addition to approving the half-percentage-point cut, Fed policymakers projected the benchmark interest rate would fall by another half percentage point by the end of this year, a full percentage point next year, and half a percentage point in 2026, though they cautioned that the outlook that far into the future is inherently uncertain.
Economic Forecasts
Following are forecasts from some major banks on economic growth, inflation, and how they expect certain asset classes to perform:
Forecasts for Stocks, Currencies, and Bonds
| Institution | S&P 500 | US 10-year | EUR/USD | USD/JPY | USD/CNY | Target Yield |
|---|---|---|---|---|---|---|
| Goldman Sachs | 5,600 | 3.85% | 1.08 | 150 | 7.20 | |
| Morgan Stanley | 5,400 | – | 1.40 | 7.5 | – | |
| UBS Global | 5,200 | 3.85% | 1.09 | 148 | 7.25 | |
| Wells Fargo | 5,300-5,500 | 3.75%-4.25% | 1.06-1.10 | 156-160 | – | |
| Barclays | 5,600 | 4.25% | 1.09 | 145 | 7.20 | |
| J.P. Morgan | 4,200 | 3.55% | 1.13 | 146 | 7.25 | |
| BofA Global | 5,400 | 3.75% | 1.12 | 151 | 7.38 | |
| Deutsche Bank | 5,750 | 4.60% | 1.07 | 135 | – | |
| Citigroup | 5,600 | 4.20% | 1.02 | 135 | 7.25 | |
| HSBC | 5,400 | 3.00% | 1.05 | 145 | 7.10 | |
| Oppenheimer | 5,900 | – | – | – | – | |
| Evercore ISI | 6,000 | – | – | – | – | |
| RBC | 5,700 | – | – | – | – |
UBS Global Research and UBS Global Wealth Management are distinct, independent divisions in UBS Group
U.S. Inflation
U.S. consumer prices rose slightly in August, but underlying inflation showed some stickiness amid higher costs for housing and other services.
U.S. Inflation Forecasts (Annual Y/Y for 2024)
| Institution | Headline CPI | Core PCE |
|---|---|---|
| Goldman Sachs | 2.6% | 2.6% |
| Morgan Stanley | 2.10% | 2.70% |
| Wells Fargo | 3.0% | 2.60% |
| Barclays | 2.9% | 2.6% |
| J.P. Morgan | 2.50% | 2.50% |
| BofA Global | 3.5% | 2.8% |
| Deutsche Bank | 3.10% | – |
| Citigroup | 2.0% | 2.7% |
| HSBC | 3.4% | – |
Real GDP Growth Forecasts for 2024
| Area | Goldman Sachs | Morgan Stanley | UBS Global | Barclays | J.P. Morgan | BofA Global | Deutsche Bank | Citigroup | HSBC | UBS Global |
|---|---|---|---|---|---|---|---|---|---|---|
| Global | 2.7% | 2.8% | 3.1% | 2.6% | 2.6% | 3.2% | 3.2% | 2.4% | 2.6% | 3.1% |
| U.S. | 2.8% | 1.9% | 2.4% | 1.2% | 4.6% | 2.7% | 2.7% | 2.0% | 2.3% | 2.5% |
| China | 0.7% | 4.2% | 4.9% | 5.0% | 6.5% | 0.7% | 4.9% | 0.7% | 4.9% | 4.6% |
| Euro | 1.1% | 0.5% | 0.6% | 0.3% | 0.7% | 1.1% | 0.9% | 1.0% | 0.5% | 0.6% |
| UK | 6.9% | -0.1% | 7.0% | 6.2% | – | 7.6% | 1.2% | 7.3% | – | 7.0% |
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