Wells Fargo Investment Institute announced on Monday that it no longer anticipates the U.S. Federal Reserve will cut interest rates in 2024. The institute, a subsidiary of lender Wells Fargo, previously forecast two rate cuts from the U.S. central bank this year. Wells Fargo is a diversified financial services company providing banking, investment management and mortgage services. Its investment institute provides investment advice and strategies.
Strategists at Wells Fargo noted, “Against the backdrop of a noticeable but likely transient inflation bump and elevated uncertainty, we believe that the balance of risks has shifted to incentivise patience from the Fed.” Heightened geopolitical risks tied to the Middle East war also contributed to the revised outlook.
Similarly, Citigroup has also adjusted its timeline for anticipated Federal Reserve rate cuts, citing persistent inflation risks coupled with unexpectedly strong gains in the U.S. job market. March saw a rebound in job growth, influenced by the conclusion of a healthcare worker strike and milder temperatures boosting activity in certain sectors.
The Wall Street brokerage now projects rate cuts totaling 75 basis points spread across September, October, and December. This is a shift from their earlier forecast of cuts in June, July, and September, according to a note dated April 3. Citigroup anticipates that indications of a weakening labour market will eventually lead to rate cuts later in the year but the timing of upcoming data suggests a later start than initially expected.
