The Fed will only cut policy rates once in 2024. This is the main lesson from the last monetary policy meeting this week. So far it had expected to make three rate cuts in 2024, but the US Central Bank has revised its forecast to a single cut.
This forecast seems logical as it now expects slightly higher inflation over the current year, which does not reassure it.
On the other hand, the year 2025 should be marked by four rate cuts rather than three, and Jerome Powell also noted that, once inflation is defeated, The fall in key rates is expected to be rapid as the Fed continues to monitor the gradual deterioration of the labour market and the US economy as a whole.
Investors - who were betting at the beginning of the year on six to seven cuts in key rates in 2024 - were satisfied with this, even if credit is likely to remain expensive in the United States for a few more quarters. This is all the more the case since inflation for May was announced in slight decrease, to 3.3% in annual change.
This gave the US markets a boost, pushing them to new highs over the week. We continue to invest in the US (equities, government and high-yield bonds) across all of our fund portfolios.