Federal Reserve Expected to Cut Interest Rates Six Times in 2024 Due to Slowing US Economy

According to Yahoo News, the Federal Reserve is anticipated to cut interest rates six times in 2024, as reported by ING Economics. These interest rate cuts are in response to a slowing US economy, with cuts expected to begin in the second quarter and continue into 2025. ING Economics predicts that moderating inflation, a cooling jobs market, and a deteriorating outlook for consumer spending will necessitate more interest rate cuts than the market currently anticipates. James Knightley, ING Economics' chief international economist, expects the Fed to start cutting interest rates in the second quarter of next year, delivering up to six 25 basis point rate cuts totaling 150 basis points. He also anticipates the interest rate cuts to extend into 2025 with at least four 25 basis point interest rate cuts. The futures market, on the other hand, suggests the Fed will cut rates by 125 basis points next year. Knightley's projected rate cuts would bring the effective Federal Funds rate to about 3.83% at the end of 2024 and to 2.83% at the end of 2025, compared to today's Fed Funds rate of 5.33%. Although the job market remains solid, with weekly jobless claims in the low 200,000 range, it has noticeably cooled. Consumer spending, while still strong, faces a more challenging path in 2024 as real household disposable incomes show signs of weakness, credit card delinquencies rise, and student loan payments add further strain. The Fed's gradual interest rate cuts are encouraging, as they suggest the economy will remain resilient and the Fed won't be forced to cut interest rates to 0% immediately, which typically occurs when the economy significantly decelerates and enters a recession.