In a survey conducted by Bloomberg, the majority of economists predict that the Federal Reserve will only reduce interest rates by 25 basis points in September. Considering that major banks on Wall Street are expecting a larger rate cut, this prediction is noteworthy. More than three-quarters of the surveyed economists expect the Fed to lower interest rates to the range of 5% to 5.25% in September, while the rest foresee a larger cut.
Divergence Between Wall Street and Economists Emerges
Wall Street’s major banks expect the Fed to make a larger rate cut at the September meeting. However, the majority of economists believe that the Fed will make 25 basis point cuts at each meeting this year. This view increases uncertainty in the markets and causes fluctuations, especially in the cryptocurrency markets.
The majority of the 51 surveyed economists expect the Fed to reduce interest rates to the range of 5% to 5.25% in September. This cut is a prominent expectation during the recent wave of sell-offs in global markets. The median estimate of economists evaluates the likelihood of the Fed making rate changes outside of scheduled meetings at 10%.
Future Interest Rate Decisions and Expectations
A large portion of economists predict that the Fed will make 25 basis point cuts in September, November, and December, and in the first quarter of 2025. These predictions indicate that while the Fed continues its efforts to control inflation, it will also try to support economic growth. However, market fluctuations and uncertainties in the global economy could be decisive in the Fed’s decisions.
The wave of sell-offs in global markets intensifies with uncertainties regarding the Fed’s interest rate decisions. This situation has caused high volatility, especially in the foreign exchange and cryptocurrency markets. Although the majority of economists believe that the Fed will continue with interest rate cuts, the expectation of larger cuts by some Wall Street banks increases market anxiety.
The decision that the Fed will make in September is of critical importance for both the US economy and global markets. Although the majority of economists think that the Fed will proceed with 25 basis point cuts, major banks on Wall Street expect a more aggressive cut. This indicates that uncertainties in the markets will continue. In terms of the cryptocurrency market, Bitcoin’s response to this development is awaited. Bitcoin was at the level of 59,872 dollars at the time of writing.
