Fed expects to start cutting rates in 2024

The Federal Reserve held a new meeting last night Beijing time. There were a number of related news after the meeting. Golden Finance compiled them as follows:

Federal Reserve News:

1. The Federal Reserve FOMC economic expectations show that the Federal Reserve expects to start cutting interest rates in 2024.

2. According to the pricing of US interest rate futures, the Federal Reserve has a 93.4% probability of raising interest rates by 75 basis points in July and a 55% probability of raising interest rates by 50 basis points in September. After raising interest rates by 75 basis points to the range of 1.50%-1.75%, the rate hike is the largest since 1994.

3. The Federal Reserve FOMC economic forecast shows that the median forecasts for the federal funds rate at the end of 2022, 2023, and 2024 are 3.4%, 3.8%, and 3.4% respectively; the median forecasts for PCE inflation at the end of 2022, 2023, and 2024 are 5.2%, 2.6%, and 2.2% respectively; the median forecast for the longer-term federal funds rate is 2.5%, and the forecast in March is 2.4%; the median forecasts for GDP growth at the end of 2022, 2023, and 2024 are 1.7%, 1.7%, and 1.9% respectively. (Cailian Press)

4. The Federal Reserve FOMC statement said that inflation remains high, reflecting supply and demand imbalances related to the pandemic, rising energy prices, and greater price pressures. The Federal Reserve believes that continued interest rate hikes are appropriate.

Powell's view:

1. Federal Reserve Chairman Powell said that interest rates will be raised to any necessary level in the coming months; consumers are spending and there are no signs of a broader economic slowdown; the economy is seen slowing down, but it is still at a healthy growth level.

2. Federal Reserve Chairman Powell said that inflation has unexpectedly risen since the Fed's May meeting; in response, the Fed decided to raise interest rates significantly, which will help ensure that long-term inflation expectations remain stable; in the coming months, it will look for strong evidence of falling inflation, and the next meeting will most likely be 50 basis points or 75 basis points. It is expected that the 75 basis point rate hike will not become the norm.

3. Federal Reserve Chairman Powell said that he is firmly committed to bringing inflation down and has the necessary tools to restore price stability; inflation must be reduced to help the employed population. The current situation is clear: the labor market is extremely tight and inflation is too high.

External market performance:

1. On June 16, the three major U.S. stock indexes closed higher. The Nasdaq rose 2.5%, the S&P 500 rose 1.46%, and the Dow Jones rose 1%.

2. BTC broke through $22,000 in the early morning, and Ethereum briefly rebounded to above $1,200.