JPMorgan Chase CIO: Fed may cut interest rates by 250 basis points by 2024

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While expectations are growing for the Federal Reserve to cut interest rates in 2024, there are multiple views on when the rate cuts will begin in 2024 and how deep they will be.

Although there are increasing opinions about the Fed cutting interest rates, rate cut predictions still come from well-known market players.

The latest information on this view comes from JPMorgan Chief Investment Officer Bob Michel.

Bob Michele said in an interview with the Financial Times that if the labor market continues to cool, the Fed may cut interest rates by 250 basis points in 2024 to reduce real profits.

“The Fed’s 5.5% interest rate is designed to keep inflation low and unemployment close to 3%.

However, inflation has come down a lot. One of the things we’ll be watching is the six-month annual core PCE inflation rate.

By this measure, inflation was 1.9%, below the Fed’s 2% target.

Therefore, although the Fed has not raised interest rates since July, policy has tightened. At present, the Fed is more likely to cut interest rates, and it should start cutting interest rates now. “

Michel pointed out that if the Fed cuts interest rates by 250 basis points, interest rates will fall to 2.75%-3%:

“I take my hat off to the Fed. They plan for a soft landing. They are very close to their 2% inflation target. The unemployment rate has been at 4% or below for 24 consecutive months. They have fulfilled their dual mandate of ensuring full employment and price stability.”

However, the CIO of JPMorgan Chase said that he believes that the soft landing plan planned by the Federal Reserve is somewhat unsustainable, and said that the most reasonable and best option to ensure that the current positive situation continues is to start gradually cutting interest rates.

Conversely, if interest rates fall too quickly, there is a risk that inflation and interest rates will accelerate again.

In November 2021, the Federal Reserve began to raise interest rates, and the price of Bitcoin reached a peak of $69,000. Since the next bear market is directly tied to the Federal Reserve raising interest rates, it is believed that policy changes here could send Bitcoin back to the past.