U.S. Federal Reserve Interest Rate Cut
The U.S. Federal Reserve cut interest rates by an oversized 50 basis points (bps) in its Sept 17-18 meeting. Chair Jerome Powell stated that this move was aimed at showing policymakers' commitment to maintaining a low unemployment rate, particularly as inflation has eased.
Fed officials projected that the benchmark interest rate could decrease by another half percentage point by year-end, a full percentage point in 2024, and an additional half percentage point by 2026. However, they cautioned that long-term forecasts are inherently uncertain.
Economic Forecasts from Major Banks
Here are forecasts for stocks, currencies, and bonds:
| Institution | S&P 500 | US 10-year Yield | EUR/USD | USD/JPY | USD/CNY |
|---|---|---|---|---|---|
| Goldman Sachs | 6,000 | 3.85% | 1.08 | 150 | 7.20 |
| Morgan Stanley | 5,400 | — | 1.40 | 7.5 | — |
| UBS Global Wealth Mgmt | 5,200 | 3.85% | 1.09 | 148 | 7.20 |
| Wells Fargo Investment | 6,200-6,400 (2025) | 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 Overview
U.S. consumer prices saw a slight increase in August, but underlying inflation remained persistent, particularly due to rising costs in housing and other services.
U.S. Inflation Projections for 2024:
| Institution | Headline CPI | Core PCE |
|---|---|---|
| Goldman Sachs | 2.6% | 2.6% |
| Morgan Stanley | 2.10% | 2.70% |
| Wells Fargo Investment | 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
Global, U.S., China, Eurozone, UK, India Growth Rates:
| Institution | Global | U.S. | China | Euro | UK | India |
|---|---|---|---|---|---|---|
| Goldman Sachs | 2.7% | 2.8% | 4.9% | 0.7% | 0.9% | 6.9% |
| Morgan Stanley | 2.8% | 1.9% | 4.2% | 0.5% | -0.1% | 6.4% |
| UBS Global Wealth Mgmt | 3.1% | 2.4% | 4.9% | 0.6% | 0.2% | 7.0% |
| Barclays | 2.6% | 1.2% | 5.0% | 0.3% | 1.1% | 6.2% |
| J.P. Morgan | 0.7% | 2.7% | 4.8% | 0.9% | 0.6% | 6.5% |
| BofA Global Research | 3.1% | 2.7% | 4.8% | 0.7% | 1.1% | 7.1% |
| Deutsche Bank | 3.2% | 2.7% | 4.7% | 0.9% | 1.2% | 7.0% |
| Citigroup | 2.4% | 2.0% | 4.7% | 0.7% | 1.0% | 7.3% |
| HSBC | 2.6% | 2.3% | 4.9% | 0.5% | 0.4% | 6.3% |
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