First Fed rate cut in June becoming less likely – Commerzbank
05.04.2024, 13:42

First Fed rate cut in June becoming less likely – Commerzbank

The release of more stellar US jobs data in the form of March Nonfarm Payrolls (NFP), has further reduced the chances of the Federal Reserve (Fed) making a first interest-rate cut in June, according to economists at Commerzbank. 

Rate cut in first half of 2024 increasingly unlikely 

“The US labor market has once again exceeded expectations.”

“The downright astonishing strength of the labor market makes a first rate cut by the Fed already in the first half of the year increasingly unlikely.”

“Fed Chair Powell regularly points out that the imbalance between supply and demand in the labor market is gradually reducing, which lowers the risk of inflation. However, the new figures do not really support this theory, as job growth has been on the rise again since fall 2023. This indicates that the economy remains very robust. There is therefore no need to rush to cut key interest rates - a narrow majority of Fed members recently still expected three rate cuts later in the year.”

“Consumer price data for March will be published next week. Once again, we expect prices to rise a little too strongly for the Fed's liking.”

“All in all, a first rate cut at the June meeting, which we still expect, is becoming less likely. The timing of the first cut is likely to be determined primarily by the further development of inflation.”

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