Fed To Cut Rates In September, Reuters Poll Claims

The US Federal Reserve will cut its key interest rate twice this year, starting in September, according to a strong majority of economists polled by Reuters who broadly raised their inflation forecasts for a second consecutive month, Indradip Ghosh reported for Reuters.

Insufficient progress in bringing inflation down further, alongside rising price expectations, has stoked some doubts about whether the Fed will move at all this year.

Although Fed officials have reassured markets that its next move will be a cut, insufficient progress in bringing inflation down further, alongside rising price expectations, has stoked some doubts about whether the Fed will move at all this year.

Nearly two-thirds of economists surveyed, 70 of 108, predicted the first reduction in the fed funds rate in September, to a 5.00%-5.25% range.

Those results, from the May 7-13 poll, compared with just over half expecting a September cut when they were surveyed last month.

“I think the Fed’s telling you hikes are not quite as on the table as the market was expecting,” said Gennadiy Goldberg, an economist at TD Securities. On Friday, Dallas Federal Reserve President Lorie Logan said that it is “just too early to think" about cutting rates, according to news reports.

She also suggested that it is unclear whether the Fed's rate is high enough to quell inflation. Logan is one of the 19 officials on the Fed's interest-rate setting committee, though she does not vote on rates this year, Christopher Rugaber also reported for the Associated Press (AP).