Bank of America, Deutsche Bank Predict Interest Rate Cuts in 2024
Bank of America (BOA) and Deutsche Bank (DB) both released outlooks Monday predicting the Federal Reserve will implement interest rate cuts next year
Bank of America (BOA) and Deutsche Bank (DB) both released outlooks Monday predicting the Federal Reserve will implement interest rate cuts next year.
"2023 defied almost everyone's expectations: recessions that never came, rate cuts that didn't materialize, bond markets that didn't bounce, except in short-lived, vicious spurts, and rising equities that pained most investors who remained cautiously underweight," said Candace Browning, head of BofA Global Research.
"We expect 2024 to be the year when central banks can successfully orchestrate a soft landing, though recognize that downside risks may outnumber the upside ones."
Michael Gapen, the bank's head of U.S. economics, said he expects the Fed to make its first rate cut in June, with the central bank cutting 25 basis points per quarter.
The 2024 outlook from Deutsche Bank's economists predicted cuts will begin at the same time, but the picture they painted was a little less rosy. The German bank expects the U.S. to enter a "mild recession" in the first half of 2024, leading the Fed to slash rates more aggressively than markets are currently pricing in.
DB expects an initial cut of 50 basis points at the Fed's June 2024 meeting, followed by 125 bps of additional cuts over the rest of the year.
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