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According to a Bloomberg survey, economists expect the Fed to cut interest rates twice this year. Economists surveyed also expressed some concerns about Kevin Warsh, Donald Trump’s nominee for Fed chairman.
A survey of 46 economists revealed that expectations for the Fed’s next interest rate cut have shifted from March to June. Despite this, most participants still predict two rate cuts of 25 basis points each before the end of the year.
According to the survey results, economists believe the pace of interest rate cuts will be faster than what futures markets are pricing in. Furthermore, this expectation implies one more rate cut than the median estimate shared by Fed officials last December.
On the other hand, approximately one-third of the economists surveyed expressed concern about Kevin Warsh, the nominee for Fed chairman. Warsh’s commitment to maintaining the Fed’s 2% inflation target also raised questions. Thirteen percent of participants said they were unsure whether Warsh would stick to this target, while eighteen percent thought he would not.
The survey also noted that expectations for interest rate cuts have changed in recent months. While the December survey predicted that the Fed would cut rates in March and September, the latest survey, conducted between March 6-11 (following the start of the conflict in the Middle East), expects the first cut to be in June and the second in October.
*This is not investment advice.