According to a Reuters poll conducted between June 23 and June 25, 2024, 78 out of 102 economists anticipate that the Federal Reserve (Fed) will maintain its current interest rate range of 3.50%-3.75% for the remainder of the year. This represents an increase from the early June poll, where 72 economists held this view, indicating a growing consensus among economists for the Fed to keep rates unchanged through year-end [1].
This expectation among economists stands in contrast to market sentiment, as the CME FedWatch tool shows that the probability of the Fed raising interest rates at least once this year is 81.7%. This divergence highlights a notable difference between economist forecasts and market pricing regarding the Fed's next moves [1].
The article also provides background on the Fed's dual mandate of price stability and full employment, and explains how interest rate changes impact the US Dollar. When the Fed raises rates to combat inflation above its 2% target, the US Dollar typically strengthens, while rate cuts to support employment or counter low inflation tend to weaken the currency. The Fed holds eight policy meetings annually, where these decisions are made by the Federal Open Market Committee (FOMC) [1].
No forward-looking statements or analyst opinions beyond the poll results and market odds are provided in the article.
CONCLUSION
A growing majority of economists now expect the Federal Reserve to keep interest rates steady in the 3.50%-3.75% range for the rest of 2024, despite market pricing suggesting a high probability of at least one rate hike. This divergence between economist consensus and market expectations could influence financial market volatility as the year progresses.