US Interest Rates. What decision will the Fed make?
Economists surveyed by Bloomberg News have shifted their expectations regarding the timing of the Federal Reserve's rate cuts.
The average forecast of 35 respondents indicates that the Federal Reserve will keep rates unchanged until mid‑next year.
The U.S. central bank, according to the assumption, will begin a rate‑cut cycle in June 2027, and then make another cut in December of the same year.
As a result, the target range for the federal funds rate would be lowered to 3,00–3,25% from the current 3.5‑3.75%.
By comparison, in the March survey respondents expected rates to reach that level earlier this year.
Only three economists, however, anticipated rate hikes in the coming months.
The next Fed meeting, which will be chaired for the first time by Kevin Warsh, will take place on June 16–17.
Experts expect the Fed to keep rates in the unchanged range, noting accelerating inflation.
As many as 82% of respondents felt that rising consumer prices currently pose a greater threat than unemployment.
No one, however, said that the labor market situation is a greater threat, which is a clear change from December, when half of the respondents held that view.
Source: Bloomberg News.
Importantly, despite lingering doubts among respondents about Kevin Warsh’s determination to fight inflation, the share of the most skeptical opinions has decreased.
Only 6% of respondents said that Warsh would not bring inflation to the Fed’s 2% target, compared with 18% in the March edition.
At the same time, 26% of respondents declared uncertainty on the matter.
The new Fed Chair has recently leaned toward Donald Trump’s calls for rate cuts through criticism and insults directed at the institution and its head, Jerome'a Powell.
The U.S. President emphasized that Kevin Warsh should make decisions independently, while also stating that U.S. rates should be lower.
Warsh is expected, according to announcements, to carry out a series of reforms in the central bank that may include changes to guidance on the future path of rates or FOMC economic forecasts.
According to Bloomberg News, 23% of respondents expect Warsh to reduce the number of press conferences after meetings.
Source: Bloomberg News.
Read also: Dollar rate on a long path to 4 PLN? Expert issued forecasts for USD/PLN and EUR/USD. “The dollar may gain.”
See also: Will the dollar surprise again? Expert issued a forecast for USD/PLN and EUR/USD. “It’s hard for me to believe there will be no more fires.”
Dollar and euro rates on Tuesday, June 16
The dollar to zloty rate on Tuesday, June 16 is at 3,67 PLN (+0.12%).
“It is widely expected that the Wednesday statement will drop the trend toward easing monetary policy and, as usual, the market will likely react to the median forecast of rates for the coming years,” analysts from ING Think said.
“This may pose some risk of a dollar rise,” they added.
Chart. Dollar to zloty rate (USD/PLN)
Source: Trading Economics.
The euro to dollar rate reaches 1,15 USD (-0.1%).
Chart. Euro to dollar rate (EUR/USD)
Source: Trading Economics.
Read also: Dollar rate before a breakout? Expert: “Capital will flow back to USD.”
See also: Dollar rate before a “nervous and dynamic” move, euro waiting for a drop? Expert issued a forecast for USD/PLN and EUR/USD.
Sources: Bloomberg, ING Think.
