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Are we on the verge of a year filled with rate cuts?

Analysts at Citi Research believe so. Their base case scenario predicts 200bps of rate cuts from the Federal Reserve over the next 12 months, starting in September.  

 

In a note released last week, the bank raised concerns about signs of a slowing US economy and cooling inflation, supporting its view that the Fed will consecutively cut rates by 25 basis points over eight meetings, beginning in September. This would reduce the base rate from its current range of 5.25% - 5.5% to 3.25% - 3.5%, where they expect it to remain for the remainder of 2025. 

 

In comparison, market consensus currently prices in a 78% chance of a rate cut in September, but only a 2.2% chance of Citi's predicted four rate cuts by year-end and just a 1% chance of six cuts in six meetings starting in September.  


Market Consensus

**Green denotes Citi’s predicted path of rate cuts. 

Calculations are based on end of day closing prices from the FactSet Futures Prices Database as at 12-07-24.  Please note that the data may not match with other sources due to differences in timings of the snapshots taken of the futures prices and methodology. Source: Fed could slash rates, Yahoo Finance.  

  

Regardless of how quickly and how far you think rates may come down, the next section of this note will look at what this means for markets and how the solutions at Atlantic House could help articulate that view. 

Source: Atlantic House Investments. Past performance does not predict future performance. Pricing is only indicative and not guaranteed.   Conclusion  

  

Conclusion


After a challenging period of rate hikes, the coming years could offer some interesting opportunities for investors. At Atlantic House, our diverse product range can offer the building blocks to improve the outcomes of your multi-asset portfolios. 


 

CAPITAL AT RISK. This is a marketing communication. Past performance does not predict future performance.


 


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