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Jun 18 - 12:55 PM

Credit Agricole: Adjusting our Fed Call Pushing First Rate Cut to September

By eFXdata  —  Jun 18 - 10:45 AM

Synopsis:

Credit Agricole has revised its forecast for the Federal Reserve's rate cuts, now projecting the first cut to occur in September instead of July. This adjustment maintains the overall forecast of 50 basis points of cuts by the end of the year, with a skip in November and another cut in December.

Key Points:

  1. Revised Timeline for Rate Cuts:

    • The first rate cut is now expected in September, pushed back from the previous July forecast.
    • The new schedule includes a pause in November, followed by another cut in December.
  2. Maintained Total Cuts for the Year:

    • Despite the shift in timing, the total projected cuts by year-end remain at 50 basis points.
    • This adjustment represents the first change in Credit Agricole's forecast since October of last year.
  3. Comparison with Market Expectations:

    • The revised forecast is a smaller shift compared to the market and other forecasters' expectations earlier this year.
    • In mid-January, the market was pricing in a full cut by March and a total of almost 170 basis points of easing at one point.

Conclusion:

Credit Agricole's updated forecast for the Federal Reserve's rate cuts now anticipates the first cut in September, with a follow-up cut in December, maintaining a total of 50 basis points of easing for the year. This revision highlights a more gradual approach compared to the market's earlier, more aggressive expectations.

Source:
Crédit Agricole Research/Market Commentary

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