Federal Reserve Surprises Market with Projected Single Rate Cut for 2024 Amid Improved Inflation Data

Washington DC, District of Columbia United States of America
Better-than-expected inflation data led to shift in forecasts
Federal Reserve projects single rate cut for 2024
Interest rate to fall to 5.1% in 2024
One quarter-point rate cut expected instead of three previously anticipated
Federal Reserve Surprises Market with Projected Single Rate Cut for 2024 Amid Improved Inflation Data

The Federal Reserve surprised the financial market with its latest interest rate forecast, signaling only one quarter-point rate cut is expected for the remainder of 2024. This shift from earlier projections came after a recent report on consumer price index (CPI) showed better-than-expected inflation data. The S&P 500 and Nasdaq indices continued to rise following the news, reaching new record highs.

According to the latest Federal Reserve projections, the benchmark interest rate will fall to 5.1% this year. In March, policymakers had anticipated three quarter-point rate cuts that would lower the Federal funds rate to 4.6%. The updated forecast reflects a median among predictions from 19 Fed policy committee members.

The Fed's decision to maintain higher interest rates could be seen as a response to concerns over inflation, which has been on the rise in recent months. In May, the CPI reported an increase of 3.3% year-over-year, with energy and food prices contributing significantly to this figure.

Despite these developments, some economists argue that further rate cuts are necessary to support economic growth and address ongoing inflationary pressures. The European Central Bank, as well as central banks in Canada and Switzerland, have already cut interest rates in response to similar concerns.

It is important to note that the Fed's decision-making process is influenced by various factors, including economic indicators and geopolitical events. As such, any significant changes in these areas could impact future rate forecasts.


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Confidence

95%

Doubts
  • Is the Fed's decision to maintain higher interest rates a response to ongoing inflationary pressures or concerns over economic growth?
  • Will further rate cuts be necessary to support economic growth?

Sources

95%

The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
(Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

Here's the Fed's new rate forecast that's moving the markets

CNBC News Yun Li Wednesday, 12 June 2024 18:19
  • Unique Points
    • Federal Reserve projected only one rate cut for the remainder of 2024.
    • The Federal Reserve’s terminal rate for 2024 is now 5.1%.
    • Seven FOMC members projected one reduction in the benchmark fed funds rate for the rest of 2024.
  • Accuracy
    • Eight FOMC members forecast two rate cuts for 2024.
  • Deception (100%)
    None Found At Time Of Publication
  • Fallacies (100%)
    None Found At Time Of Publication
  • Bias (100%)
    None Found At Time Of Publication
  • Site Conflicts Of Interest (100%)
    None Found At Time Of Publication
  • Author Conflicts Of Interest (100%)
    None Found At Time Of Publication

51%

The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
(Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

Opinion | The Fed’s interest rate mistake is a gift for Trump

MSNBC News Thursday, 13 June 2024 05:10
  • Unique Points
    • European Central Bank, as well as central banks in Canada, Switzerland and other countries have cut rates
    • >50% of inflation in the middle six months of 2023 was driven by corporate profits<
  • Accuracy
    • Federal Reserve left interest rates unchanged at around 5.3%
    • Jerome Powell suggested one or two rate cuts could come before the end of the year
    • The Fed's March projection called for three rate cuts this year with a fed funds rate hitting 4.6%
  • Deception (30%)
    The article contains editorializing and pontification by the author. The author expresses their opinion that the Federal Reserve's decision to maintain interest rates is a mistake and a gift to Donald Trump. They also imply that the Fed's theory of fighting inflation has nothing to do with politics, but later in the article they mention Trump's past attempts to undercut the Federal Reserve's independence from the White House.
    • It's ironic, then, that the Fed’s mistaken interest rate policy is unnecessarily risking the economy, raising the cost of living and buttressing a key voter concern that may help bring Trump back.
    • The Fed should be cutting rates already. And every month it refuses to do so is a gift to Donald Trump.
  • Fallacies (75%)
    The author commits an appeal to consequence fallacy by suggesting that the Fed's decision not to lower interest rates is a gift to Donald Trump. The author also makes a hasty generalization when stating 'Some of this discontent is rooted in partisanship: Republicans almost entirely flipped their views on the economy the moment Biden was inaugurated.'
    • ]The Fed's mistake is a gift to Trump.[/
    • Some of this discontent is rooted in partisanship: Republicans almost entirely flipped their views on the economy the moment Biden was inaugurated.
  • Bias (15%)
    The author expresses a clear bias towards the Federal Reserve's decision to maintain interest rates and implies that it is a gift to Donald Trump. The author also suggests that the Fed's theory has nothing to do with politics but later states that the Fed's mistake is helping Trump, implying political bias.
    • But a look beneath those top-line numbers shows this cautious reading is a mistake.
      • It's ironic, then, that the Fed’s mistaken interest rate policy is unnecessarily risking the economy, raising the cost of living and buttressing a key voter concern that may help bring Trump back.
        • The Fed's delay is particularly frustrating because interest rates are a clumsy tool for fighting this bout of inflation.
          • The Fed should be cutting rates already. And every month it refuses to do so is a gift to Donald Trump.
            • The problem is that, by design, higher interest rates are not victimless. The very point is to put a brake on economic growth by making consumers reduce spending. But elevated rates increase the cost of mortgages, credit cards and car loans.
            • Site Conflicts Of Interest (100%)
              None Found At Time Of Publication
            • Author Conflicts Of Interest (0%)
              None Found At Time Of Publication

            96%

            The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
            (Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

            A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

            Powell Upbeat, Fed Signals Just One Rate Cut In 2024

            Investors.com Financial News Site Analysis - Comprehensive Report on Market Coverage and Analysis - Overall Rating: 90/100 (Highly Reliable, Informative, and Engaging Source of Financial Information). Investor's Business Wednesday, 12 June 2024 20:25
            • Unique Points
              • The Fed signaled one quarter-point rate cut is likely in 2024
              • Powell stated that more good inflation news would lead the Fed to lower its inflation forecast
            • Accuracy
              No Contradictions at Time Of Publication
            • Deception (100%)
              None Found At Time Of Publication
            • Fallacies (95%)
              The article contains some instances of appeals to authority and an instance of a hasty generalization. The Federal Reserve's rate cut projections are presented as authoritative statements, and the fact that they were surprising to Wall Street is used as evidence that they carry weight. Additionally, Powell's statement that 'the big thing that changed was the inflation forecast' implies that this is a significant factor in the Fed's decision-making process and therefore carries authority. The hasty generalization comes from the statement 'Eleven policymakers see no more than one rate cut as appropriate, including four who penciled in zero cuts.' This statement is based on the opinions of eleven out of nineteen policymakers and is presented as a definitive fact about the Fed's stance on interest rates.
              • The Federal Reserve surprised Wall Street on Wednesday, signaling that just one quarter-point rate cut is likely this year.
              • Powell made it clear that one inflation report isn’t nearly enough to give the Fed the confidence it needs to start cutting rates.
              • Eleven policymakers see no more than one rate cut as appropriate, including four who penciled in zero cuts.
            • Bias (100%)
              None Found At Time Of Publication
            • Site Conflicts Of Interest (100%)
              None Found At Time Of Publication
            • Author Conflicts Of Interest (100%)
              None Found At Time Of Publication