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Following three months of hotter-than-expected inflation reports, no one imagined the Federal Reserve would start cutting rates at its policy meeting earlier this month. The Fed is holding the federal funds rate high, at a target range of 5.25% to 5.50%, until the economy shows more definitive signs of slowing.
But what happens if this week’s inflation report moves down closer to the Fed’s 2% annual inflation target? Could we see an interest rate cut before the end of 2024?
I’m shocked that I’m still hearing people calling for rate cuts and anticipating rate cuts. I don’t know how they think that’s possible at this point.
Don’t bet on it, according to one economist.
“I’m shocked that I’m still hearing people calling for rate cuts and anticipating rate cuts,” said Gregory Heym, chief economist at real estate service company Brown Harris Stevens. “I don’t know how they think that’s possible at this point.”
However, not everyone is convinced that rate cuts are completely out of the question. There’s still a slim possibility for inflation to downshift in time for a late summer rate cut, according to a report from Wells Fargo senior economist Sarah House.
The report predicts inflation will trend lower over the remainder of the year and that core inflation — which excludes food and energy costs — could drop to 2.8% annually toward the end of the year.
Why does CPI matter?
The Consumer Price Index is the most widely used measure of inflation, reflecting changes in how much we …
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