Following the US March personal consumption expenditure (PCE) price index released on the 26th, in the US federal funds interest rate futures market, the probability that the Federal Reserve Board (FRB) will cut interest rates in September increased slightly to 60%. Photo taken in January 2022 (Reuters, 2024)
[26ain (Reuters)]- Following the release of the US personal consumption expenditure price index (PCE) in March on the 26th, the US federal funds interest rate futures market (FF) indicates the likelihood of a September interest rate cut by the Federal Reserve Board ( FRB) slightly to 60%. See more
Although there was little evidence in the PCE price index that reinforced the need for an early rate cut, it also did not rule out the possibility of a rate cut starting in the second half of the year. In the US interest rate futures market, there is a 50% chance of a second interest rate cut this year.
“The fact that we are so close to consensus can be taken with a sigh of relief,” said Omar Sharif, an analyst at Inflation Insights.
“Given the momentum in the economy and prices, we do not expect the Fed to seriously consider easing monetary policy until its meeting in September at the earliest,” said Nationwide economist Ben Ayers. “There is also a risk that further economic recovery could delay interest rate cuts until 2025, which poses a major downside risk to next year’s growth.”
In the interest rate futures market, the probability of no rate cut at all by the end of this year is around 17%, down from around 20% before the publication of the PCN price index.
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