New expectations for lower rates

Paula Bujia and Facundo Sonatti joined us for a special webinar on rates and the US market. In this talk we addressed our expectation on the Federal Reserve's rate cut.

After a higher than expected first quarter, inflation appears to have resumed its downward trend, as seen in the Consumer Price Index (CPI) released today. We expect this trend to become more pronounced in the coming months as consumption slows.

Although the Fed will likely need more data to make definitive decisions, we believed they would show two rate cuts of 25 basis points each in 2024. The market was even estimating a 70% chance of one cut in September and another before the end of the year.

Finally, there was partial news that 8 officials expect two rate cuts this year, 7 expect one rate cut, and 4 officials expect no rate cuts this year. The significantly different views among the June 2024 Fed members are due to varying interpretations of the economic data, different theoretical approaches, and the different regional economic conditions represented on the committee. As a conclusion, we can expect, for now, a single rate cut by 2024.

If you are interested in knowing more details about the complete economic outlook in the United States, you can watch the entire dialogue with Paula and Facundo at the following link link.