Bank of America Corp. (NYSE:BAC) analysts recently released a note predicting that the Federal Reserve will cut interest rates just once this year, while they had previously predicted four rate cuts.
“2024 is starting to look like 2015, but in reverse. Then the Fed signaled rate hikes that it couldn’t deliver; now the Fed could signal cuts that the inflation data doesn’t justify,” Bank of America economist Michael Gapen said in the note. “Accelerating inflation this year makes a cut before December challenging in our view.”
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In 2015, the Fed raised interest rates and reduced support for the American economy, even though inflation rates rose only minimally by 0.12%.
According to the U.S. Bureau of Labor Statistics, the consumer price index rose 3.5% in March, surpassing the 3.2% increase in the 12 months through February. This increase was primarily due to significant price increases for food and beverages. Juice and beverage prices rose 27.5%, while egg prices rose 4.6%.
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While 2015 could be viewed as a great buying opportunity for US stocks, with the SPDR S&P 500 ETF Trust (NYSE:SPY) is up about 142% year-to-date, but others aren’t so sure it’s the right parallel.
Jamie Dimon, CEO of JPMorgan Chase & Co., for example, sees a different and potentially more threatening future for markets given how much money is needed to address today’s pressing problems.
In particular, he shares his view that “the $2 trillion budget deficit, the infrastructure and IRA bills, the green economy, the remilitarization of the world and the restructuring of trade are all inflationary,” which “to me is as in the 1970s”.
As he pondered whether investors were prepared for higher-than-expected inflation, Dimon ominously said he was “not sure.”
Meanwhile, the Fed appears to be delaying any interest rate cuts until inflation is more manageable.
In an interview with Bloomberg on April 15, John Williams, president and CEO of the Federal Reserve Bank of New York, said: “At some point we have to begin a process to bring interest rates back to more normal levels, and in my opinion that process is .” is expected to begin later this year.
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This Bank of America article believes “2024 is starting to look like 2015, but in reverse,” while Jamie Dimon warns that 2024 looks like the 1970s originally appeared on Benzinga.com
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