MFS: Fed will lower interest rate in May or June

MFS: Fed will lower interest rate in May or June

1 februari 2024

Fed
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Benoit Anne, Managing Director of the Investment Solutions Group at MFS, comments on this weeks Fed meeting:

'The Fed has delivered a cautious message, signaling that a rate cut in March is not the baseline scenario. In addition, there was no announcement yesterday about a QT adjustment. Instead, it was signaled that the QT discussions would be initiated at the next policy meeting.

On this basis, we expect that in the near term the implied probability of a rate cut at the March FOMC as priced by Fed fund futures will go down markedly. It now appears that the balance is skewed towards a first rate cut to be delivered in May or June. That sounds reasonable to us. We had been in the camp of thinking that the rate market had been a bit ahead of itself.'

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