JPMorgan, $JPM, and Citi, $C, now predict the Fed to cut rates by 50 bps in September, 50 bps in November, 25 in December
The Federal Reserve held interest rates steady Wednesday but hinted that it is nearer to easing monetary policy as it cited "some further" progress on inflation and Fed Chair Jerome Powell told reporters a September cut "could be on the table."
"We think the time is approaching," Powell said in response to a question from Yahoo Finance, noting that the "overwhelming sense" from his colleagues is that the case could be made for a cut "as soon as the next meeting" on Sept. 17-18.
Fed officials voted to keep their benchmark interest rate in a range of 5.25%-5.50%, a 23-year high. The decision was unanimous.
The fed funds rate has been in this range since last July as part of the Fed’s aggressive campaign to tamp down inflation that ballooned during the pandemic.
But Fed officials hinted in a policy statement that they are inching closer to the confidence needed to lower rates as inflation continues to cool and the job market slows.
Powell also used a press conference Wednesday afternoon to signal several times that cuts could be getting closer.
While Powell told reporters the Fed has "made no decisions about future meetings, and that includes the September meeting," he also acknowledged that "the broad sense of the committee is that the economy is moving closer to the point at which it will be appropriate to reduce our policy rate."