Barclays analysts anticipate a shift in the Federal Reserve's monetary policy, expecting a continuous interest rate cut beginning March, according to reports.
Economic Outlook:
Analysts project Personal Consumption Expenditures (PCE) to average 1.9% in the last six months of 2023, aligning with the Fed's 2% inflation target.
Fed's Strategy:
With PCE meeting the inflation goal, Barclays foresees the Federal Open Market Committee (FOMC) adopting a more accommodative stance, reducing rates by 25 basis points at alternate meetings starting March.
Rate Projections:
Analysts predict the Fed funds rate to decrease to 4.25% to 4.50% by year-end and approximately 3.25% to 3.50% by the conclusion of 2025, compared to the current 5.25% to 5.50%.
Analyst Insight:
The analysts clarify their rate cut projection, attributing it to a recalibration of nominal policy rates in response to lower inflation. They emphasize the projection doesn't account for political considerations, anticipating FOMC decisions based on economic factors and the inflation outlook.
Timing Shift:
Barclays revises its rate cut forecast from June to March, indicating an earlier-than-expected adjustment.
Bitcoin's Potential Gains:
Renowned investor Jan van Eck suggests falling interest rates could drive gains for Bitcoin, highlighting the correlation between stores of value and interest rates. He sees strong macro factors behind both Bitcoin and gold, expecting continued positive trends.
While the forecast indicates potential economic adjustments, it's essential to consider the broader implications. The impact on various sectors, including the potential gains for Bitcoin, requires careful monitoring.
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