Interest Rate Cut by the Federal Reserve
(Reuters) – The U.S. Federal Reserve cut its interest rate by 50 basis points (bps) during its September 17-18 meeting, a move Chair Jerome Powell stated aimed at demonstrating policymakers' commitment to a low unemployment rate due to easing inflation.
In addition to the rate cut, Fed policymakers projected a further half-percentage-point decrease by the end of this year, a complete one-point reduction next year, and an additional half point in 2026, while acknowledging the uncertainty of long-term forecasts.
Economic Growth and Inflation Forecasts
Following are forecasts from major banks regarding economic growth, inflation, and asset class performance:
Forecasts for Stocks, Currencies, and Bonds:
| Institution | S&P 500 Target | US 10-year Target Yield | EUR/USD | USD/JPY | USD/CNY |
|---|---|---|---|---|---|
| Goldman Sachs | 6,000 | 3.85% | 1.08 | 150 | 7.20 |
| Morgan Stanley | 5,400 | (for June 2025) | 1.40 | 7.5 | |
| UBS Global Wealth | 5,200 | 3.85% | 1.09 | 148 | 7.20 |
| 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 Research | 5,400 | 3.50% | 1.12 | 151 | 7.30 |
| Deutsche Bank | 5,750 | 3.80% | 1.07 | 135 | |
| Citigroup | 5,600 | 4.20% | 1.08 | 141 | 7.20 |
| HSBC | 5,400 | 3.00% | 1.05 | 145 | 7.10 |
| Oppenheimer | 5,900 | ||||
| Evercore ISI | 6,000 | ||||
| RBC | 5,700 |
U.S. Inflation
U.S. consumer prices saw a slight rise in August; however, core inflation remained sticky due to increased costs for housing and other services.
U.S. Inflation Forecasts (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 Research | 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 Wealth | Barclays | J.P. Morgan | BofA Global | Deutsche Bank | Citigroup | HSBC |
|---|---|---|---|---|---|---|---|---|---|
| Global | 2.7% | 2.8% | 3.1% | 2.6% | 2.6% | 3.1% | 3.2% | 2.4% | 2.6% |
| U.S. | 2.8% | 1.9% | 2.4% | 1.2% | 2.7% | 2.7% | 2.7% | 2.0% | 2.3% |
| China | 4.9% | 4.2% | 4.9% | 5.0% | 4.6% | 4.8% | 4.7% | 4.7% | 4.9% |
| Europe | 0.7% | 0.5% | 0.6% | 0.3% | 0.7% | 0.7% | 0.9% | 0.7% | 0.5% |
| UK | 0.9% | -0.1% | 0.2% | 1.1% | 1.1% | 1.1% | 1.2% | 1.0% | 0.4% |
| India | 6.9% | 6.4% | 7.0% | 6.2% | 6.5% | 7.1% | 7.0% | 7.3% | 6.3% |
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