Expert Insights: Morgan Stanley and Goldman Sachs diverge on Fed rate cut forecasts

<p>Morgan Stanley economists are forecasting that Federal Open Market Committee (FOMC) will make deep interest-rate cuts over the next two years as inflation cools.</p><p>Goldman Sachs, on the other hand, expect fewer reductions and a later start.
</p><p>Bloomberg have a piece up comparing the divergent views. Bloomberg is gated but the main points are:</p><p>MS expect the Fed to start cutting rates in June 2024</p><ul><li>then cut again in September and every meeting from Q4 2024 onward</li><li>cut by 25-basis point each time</li><li> will therefore take Fed Funds down to 2.375% by the end of 2025</li></ul><p>

Goldman Sachs' projection </p><ul><li>initial 25-basis-point reduction in Q4 2024</li><li>one cut per quarter through to the middle of 2026</li><li>total of 175 basis points in cuts</li><li>taking Fed Funds down to a 3.5%-3.75% target range</li></ul><p>Even this guy doesn't know.</p>

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