The US Federal Reserve is now expected to make one only interest rate cut this year, down from expectations of at least two or three rate cuts this year, amid persistent concerns about the lingering inflationary pressures, according to a new Financial Times-Chicago Booth economist poll. Over half of the 39 polled academic economists forecast a single 25-bps cut in 2024, while a quarter of the analysts anticipate no cuts at all. The forecast comes as the Fed wraps its two-day June meeting today.

(** Tap or click the headline above to read this story with all of the links to our background and outside sources.)

With only four meetings left in the year, “rapid-fire” cuts in the current climate are unlikely, economists say. “The Fed’s narrative is going to be very similar to what we’ve been hearing: ‘We’ve made progress bringing down inflation; we’re not in a hurry to cut rates,’” Nathan Sheets, a former senior economist at the Fed, currently global chief economist at Citi, told the Associated Press.

The key data everyone is waiting for: US inflation figures will be out today, ahead of the Fed’s “dot plot,” which will set expectations for the rate cuts to come. Inflation fell to 3.4% in April.

When will the Fed deliver the cut? A third of the polled economists anticipate the Fed pulling the trigger on the first cut in September, the Fed’s final meeting before the presidential elections. Investors are also banking on the Fed to begin cutting rates in September as well, according to the CME FedWatch Tool.

Traders are already unwinding their positions on a rally following the meeting, as investors price in just one cut this year, Bloomberg reports. Yields on 10-year notes have also climbed near 4.48% earlier this week.

Economists’ optimism for a soft landing for the US economy has also increased, with 52% of FT’s poll respondents now predicting that the US will not fall into a recession until 2026 or beyond, compared to 46% in March.

ALSO ON PLANET FINANCE- Kuwait’s first IPO in two years: Beyout Investment Group has made its debut on the Boursa Kuwait, the bourse’s first in around two years. The company raised some USD 147 mn from taking a 30% stake to market. Our friends at EFG Hermes UAE were joint bookrunners and global coordinators on the offering alongside the National Investments Company. (Press release | pdf).

EGX30

26,082

+0.7% (YTD: +4.8%)

USD (CBE)

Buy 47.49

Sell 47.63

USD (CIB)

Buy 47.51

Sell 47.61

Interest rates (CBE)

27.25% deposit

28.25% lending

Tadawul

11,775

-0.7% (YTD: -1.6%)

ADX

9,000

+0.1% (YTD: -6.0%)

DFM

4,009

+0.9% (YTD: -1.3%)

S&P 500

5,375

+0.3% (YTD: +12.7%)

FTSE 100

8,148

-1.0% (YTD: +5.4%)

Euro Stoxx 50

4,965

-1.0% (YTD: +9.8%)

Brent crude

USD 81.92

+0.4%

Natural gas (Nymex)

USD 3.11

-0.7%

Gold

USD 2,333.00

+0.3%

BTC

USD 67,298.30

-3.4% (YTD: +59.1%)

THE CLOSING BELL-

The EGX30 rose 0.7% at yesterday’s close on turnover of EGP 3.0 bn (35.3% above the 90-day average). Local investors were net buyers. The index is up 4.8% YTD.

In the green: GB Corp (+8.8%), E-finance (+5.1%), and Palm Hills Development (+4.3%).

In the red: Heliopolis Housing (-11.0%), Abu Qir Fertilizers (-4.0%), and Eastern Company (-3.3%).

Tags: