Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

'The most likely outcome is two cuts this year starting September' - Evercore

Published 21/05/2024, 18:48
© Reuters.

Evercore ISI reacted to today's remarks by Federal Reserve Governor Christopher Waller, suggesting a possible shift in monetary policy later this year.

Waller's statements, which were seen as more hawkish compared to Vice-Chair Richard Clarida's previous day remarks, indicated a gradual progress towards the 2% inflation goal.

Waller did not express immediate encouragement but noted that the real economic conditions aligning with this target appear to be resuming.

Waller's analysis of the April inflation report showed it did not signal a reacceleration of inflation, hinting that another rate hike by the Fed might be unnecessary.

He stressed the need for "several more months of good inflation data" before considering a rate cut, implying that a clear downshift in inflation over the coming months could prompt action in September.

Despite Waller's cautious approach, emphasizing that the factors influencing first-quarter inflation have not completely vanished, Evercore ISI interprets his comments as aligning with the broader consensus among Fed officials. 

They suggest that there is an unspoken agreement to assess economic data over the next three to four months, which will determine the central bank's next move.

Evercore ISI's analysis points to two possible outcomes based on the upcoming economic data: a dovish scenario where first-quarter inflation is deemed temporary and the economy shows moderation, potentially leading to a rate cut in September, or a hawkish scenario where persistent macroeconomic strength and inflation could result in an extended hold on rates.

The firm concludes that the most probable scenario involves two rate cuts starting in September, with the next likely scenario being no cuts until after March. 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.