[October 2023]
1 minute speech_Week 5 in October
Title : Investors should expect the fed to cut rates in 2024: Strategist
Link : https://youtu.be/-YMY2_CBuZc?si=LU6-2Xlj1Z3-vg6P
Time : 00:00~03:04
1. Presentation script
Good morning, everyone. Let's discuss some important financial updates. The Federal Reserve has shared that the growth in wages and the rise in prices might slow down a bit. They've studied the U.S. economy's performance in recent months and found it to be moderate. Experts are pondering if this might influence future decisions on interest rates, especially for 2024. This is crucial for those considering significant investments or purchases. If the economy remains stable, we might see some favorable changes in borrowing costs. However, the current data gives us mixed signals. The Federal Reserve's goal of maintaining a 2% rate is something we should keep an eye on. Thank you for your attention.
2. Video summary
Wage growth and inflation may soon slow further. This is according to a new report. The report came out Wednesday from the Federal Reserve.
The FED said in its latest beige book that the economic growth in the U.S was modest in July and August. Most districts reported price growth slowing overall.
Our next guest says the economy's resilience has shown in consumer data and even earnings results. But is it enough to prompt fed officials to scale back their estimates for rate cuts in 2024? That is the big question.
Kristen, City Global wealth head of North American Investments, is still here with us. Everyone wants to know, especially those waiting to see when rates will come down for larger purchases like a home. Is a cut something we should expect in 2024?
I think we should expect a cut in 2024. You can see what the market is doing right now in terms of pricing out some cuts. It's this dynamic between hard landing and soft landing scenarios.
The FED's mandate is full employment and price stability. If they see inflation come down and still have a positive employment picture, what would prompt them to cut rates? Chairpel's comments suggest we don't need to keep rates higher for longer if we're getting the desired results. We could see some cuts start to happen in the second half of next year.
The topic in August was the neutral rate and trying to determine where the economy is neither contracting nor expanding. We don't need a full-blown recession for the FED to consider pulling back on rates.
For the FED to pull back on rates, they'd need to see a decrease in inflation risk. Recent data has been conflicting. ISM services data suggests the economy is still hot. Data from the beige book suggests consumers might be facing challenges, especially in travel and leisure.
They need to see more stable inflation to be convinced their job is done. We anticipate inflation might come down to around three and a half percent or maybe two and a half percent by next year. The FED's commitment to a two percent rate will be an interesting dialogue.