Pantheon Macroeconomics predicts Fed rate cuts in late 2023

Pantheon Macroeconomics expects significant Federal Reserve rate cuts by the end of 2023.

Pantheon Macroeconomics predicts Fed rate cuts for November and December

Pantheon Macroeconomics announced on Thursday that it anticipates the Federal Open Market Committee (FOMC) will cut interest rates by 50 basis points in both November and December. This prediction comes after an uptick in core inflation data, which rose to 0.3% month-over-month in August, surpassing expectations of 0.2%. Despite market reactions suggesting a more cautious approach from the Fed, which now leans toward a quarter-point cut at the upcoming meeting, Pantheon believes inflationary pressures will ease, citing factors like falling services inflation and stable goods prices.

The outlook from Pantheon Macroeconomics highlights a potential shift in monetary policy that could impact various sectors. The expected rate cuts aim to stabilize the economy amid fluctuating inflation numbers. This projection reflects confidence in the resilience of the U.S. economy, though it also raises concerns among market participants about the alignment of these predictions with the Fed's overall strategy. If inflation continues to climb, the Federal Reserve may face a dilemma on how to address mounting economic pressures without derailing growth.

Highlights

Investor sentiment will be key in the coming months as the Fed navigates rate adjustments.