As policymakers consider a mixed bag of economic data, the US Federal Reserve is expected to maintain interest rates unchanged this week but may reduce the number of cuts it has scheduled for this year.
Numerous analysts have projected that the Federal Open Market Committee (FOMC), which sets interest rates, will not lower them from their current 23-year high before September at the latest due to the strong labor market and the strong progress being made against inflation.
The difference between the Federal Reserve (Fed) and the European Central Bank (ECB), which started lowering interest rates last week, would probably widen if cuts were to begin in September.
The majority of analysts predict that the data since March will lead the 19 members of the FOMC to reduce the number of cuts they anticipate this year, resulting in a median reduction from three to two.
We see the Fed revising its outlook at the June FOMC meeting in favor of slower growth and firmer inflation,” economists from Bank of America stated in a note to investors that were released on Friday.
They stated that “it should project two rate cuts this year and a cutting cycle that begins in September,” and they added that before starting to lower interest rates, the FOMC would probably need to see more proof of deflation.
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