Market Analysis: Investors Favor Predictions of Interest Rate Cuts This Year

On June 19, analyst R. Burns McKinney said that investors know that interest rates will not change, but they are concerned about the Fed’s forecast of interest rate cuts between now and the end of the year. The previous dot plot predicted 2 rate cuts, and investors are worried that this forecast will be lowered to 1. However, the Fed kept its expected rate cuts at 2, and in general, investors like to see that. However, Powell’s comments also suggest that the FOMC raised its year-end inflation estimate and lowered its guidance for full-year GDP growth. The slowdown in GDP growth may be the reason why the central bank maintained its previous expectations; However, investors are concerned that the higher inflation outlook means fewer rate cuts in the future.