Market expectations for US interest rate cuts in 2024 have declined significantly since the end of last year. Sven Smit, senior partner and chair of the McKinsey Global Institute, and coauthors find that the market is now mostly anticipating fewer than three cuts, a sharp decrease from the five cuts that many expected in January. This shift in expectations likely results from factors including sticky inflation and the Fed’s tight monetary policy.
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An area graph shows market expectations for US interest rate cuts in 2024. At the start of 2024, almost 100% of respondents believed that there would be >3 cuts to the rate for the year. In May 2024, <5% of respondents thought so, while ~80% now expect <3 cuts.
Source: CME Group; Macrobond; McKinsey analysis.
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To read the article, see “Global Economics Intelligence executive summary, April 2024,” May 21, 2024.