United States Federal Reserve - Not Late to the Interest Rate Cuts

With the beginning of 2024, the chances of a rate cuts cycle for the United States were going through a serious phase of discussion, with many economists and policy experts. Considering this year to be the election of a new president, the Federal Reserve has too little to do in a short span to get the economy on track to stability.

To put into perspective the Consumer Price Index (CPI) is said to have shown no change, and the signs of a cooling phase are relatively, a long shot. Food inflation and home prices have remained higher, with food inflation increasing by 0.2 percent; as per official estimates. On a year-on-year basis, the prices have increased between 2.2-2.5 percent, which shows the inflation remains sticky.

Last month, it was surprising to see the Fed not cutting the interest rates. Though the inflation remained very sticky and they have not seen any respite in reaching the 2 percent mark, the economy is said to have performed better considering the other economic indicators such as employment and home prices doing pretty well. It is a point to note that the US Fed still feels, a long way to go to bring inflation to the target range but is willing to take the plunge for a rate cut or more.

From the whispers from many bankers, policymakers, and economists, speculations of just one or two rate cuts would be more likely for 2024.

July US Federal Bank Highlights

The rhetoric of the current meeting is mostly going to be based on whether there is a cut. Considering, the position of the Fed it's more likely that they will hold on to the interest rates and look ahead to the proposed timeline of cuts in September and more by the end of the year. Considering the position of Fed Governor Powell, he is emphasizing the data flow of inflation, if it is going to meet the two percent target range. From assessing the position, the officials want to be sure when they make the move of going in for cuts. Currently, the rates will mostly go in unchanged at 5.25-5.50 percent and will remain the same until the September meeting.

Another major issue highlighted by the Fed officials is more in line with the job market in the United States of America. Since the inflation is said to remain sticky, the job growth is said to have fallen. The hiring spree in all sectors is said to have fallen and it's reflected in the official estimates of 177000 jobs this month compared to 275000 jobs the same time a year ago. It is a pressing issue for the Fed to look at the inflation and the job market, and find a middle ground without hurting either of the mentioned parameters. We can only hope and wait to see what position the Fed will take in September and the months ahead. For now, from an overview perspective, it's mostly an unchanged stance from the Federal Reserve.