Citigroup predicted that the Federal Reserve could make its first interest rate cut in September. In this context, Citi has postponed its forecast for a Fed rate cut from June to September.
In addition, JPMorgan also announced its Fed interest rate forecast. In his annual letter to shareholders, JPMorgan CEO Jamie Dimon issued important warnings regarding the impact of the war in Iran on the global economy.
At this point, Dimon stated that the markets have ruled out the possibility of the Fed cutting interest rates this year.
Jamie Dimon said that energy and commodity shocks stemming from the Iran war could make inflation permanent and push interest rates higher than expected.
Dimon argues that sharp increases in oil and commodity prices could keep inflation high for an extended period, leading to interest rate hikes beyond market expectations.
According to CME FEDWatch, the probability of the Fed keeping interest rates unchanged in April is priced at 99.5%, while the probability of a rate cut is nonexistent. The probability of a rate increase is priced at 0.5%.
In June, the probability of the Fed keeping interest rates unchanged is priced at 95.4%, while the probability of a rate cut is priced at 4.1% and the probability of a rate increase is priced at 0.5%.
*This is not investment advice.