(Reuters) -Brokerages have amped up expectations of an interest rate cut by the U.S. Federal Reserve in September after an unexpected drop in consumer prices in June shored up policymakers’ confidence in their fight against inflation.
The consumer price index dipped 0.1% in June, while economists had forecast a 0.1% rise.
The Fed held interest rates steady at 5.25-5.50% since last July.
After the June CPI data, J.P.Morgan, Macquarie and Deutsche Bank brought forward their expectations of the first cut to September. Barclays now expects two cuts this year instead of one, the first cut in September, followed by another in December.
Here are the forecasts from major brokerages after the June CPI data:
Brokerage First cut in Number of cuts in Quantum (NASDAQ:) of cuts Fed funds target
2024 in 2024 rate at end 2024
Goldman Sachs September 2 50 bps 4.75-5.00%
BofA Global Research December 1 25 bps 5.00-5.25%
UBS Global Wealth September 2 50 bps 4.75-5.00%
Management
J.P.Morgan September – – –
Macquarie September 2 50 bps 4.75-5.00%
Wells Fargo September 2 50 bps 4.75-5.00%
Nomura September 2 50 bps 4.75-5.00%
Deutsche 3 75
Bank September bps 4.50-4.75%
Barclays 2 50
September bps 4.75-5.00%
Morgan 3 75
Stanley September bps 4.50-4.75%
Here are the forecasts before the June CPI data:
Brokerage First cut in Number of cuts Quantum of cuts Fed funds target
in 2024 in 2024 rate at end 2024
Goldman Sachs September 2 50 bps 4.75-5.00%
BofA Global Research December 1 25 bps 5.00-5.25%
Deutsche Bank December 1 – –
UBS Global Wealth September 2 50 bps 4.75-5.00%
Management
J.P.Morgan November 1 – –
Morgan Stanley September 3 75 bps 4.50-4.75%
Citigroup September 3 75 bps 4.50-4.75%
UBS Global Research* December 1 25 bps 5.00-5.25%
Barclays September 1 25 bps 5.00-5.25%
Macquarie December – 25 bps –
* UBS Global Research and UBS Global Wealth Management are distinct, independent divisions in UBS Group
