Fed's Rate Forecasts May Not Align With Market Expectations, Analyst Says

According to Odaily, Elmar Voelker, a senior fixed income analyst at Baden-Württemberg Bank (LBBW), stated in a report that the new interest rate forecasts to be released at next week's Federal Reserve meeting, known as the dot plot, are unlikely to align with the current rising expectations for rate cuts. Voelker remarked, 'It seems at least questionable whether the forecast adjustments can keep pace with market expectations.' This skepticism extends to the 2025 forecasts as well. Voelker noted that the dot plot could become a potential stumbling block for bond price increases. The market speculates that the Federal Reserve might significantly cut rates by 50 basis points next week, but the bank's recent forecasts only suggest a 25 basis point cut this year.