Federal Open Market Committee (FOMC) response – Fed Funds peak is in, 1st cut in March '24

<p>The Federal Reserve hiked its Fed Funds again on Wednesday:</p><ul><li><a href="https://www.forexlive.com/news/forexlive-americas-fx-news-wrap-26-jul-fed-raises-rates-by-25-bps-to-55-22-year-high-20230726/" target="_blank" rel="follow" data-article-link="true">Forexlive Americas FX news wrap 26 Jul: Fed raises rates by 25 bps to 5.5%. 22-year high.</a></li></ul><p>Via Westpac (in brief), their assessment:</p><ul><li>FOMC to assess policy one meeting at a time</li><li>With the downside risks to growth now believed to be as significant as inflation's potential upside, the FOMC are beginning to look beyond the tightening cycle.</li><li>There is nothing in July’s meeting communications to dissuade us from the view that the 5.375% rate reached today will prove the peak fed funds rate for this cycle. Further, Chair Powell’s guidance on the lags with which policy impacts also supports our expectation that the first cut is likely to be seen in March 2024 and be followed by a sizeable cutting cycle to mid-2025, to a broadly neutral level of 2.625%. Capacity constraints, particularly for housing, are the chief risk to these views.</li></ul>

This article was written by Eamonn Sheridan at www.forexlive.com.