Skip to content Interest Rate Cuts Forecasted – December 27-2023
In finance, there’s a lot of focus on the dollar index, US inflation, and interest rates. The dollar index was steady on a recent Wednesday, staying around 101.5. This level is pretty close to the lowest it’s been in the past five months. This stability comes amidst growing signs that US inflation is slowing down. This trend leads many to believe that the Federal Reserve might begin to reduce interest rates in the coming year.
Delving into the details, data released last Friday played a significant role in shaping these expectations. The core PCE index, the Federal Reserve’s preferred way to measure inflation, decreased. It fell to 3.2% in November, down from October’s 3.4%. This drop was even below the anticipated 3.3%. As a result, market players are now almost certain (around 80% sure) that the central bank will start to lower rates as soon as March. They expect a total reduction of about 150 basis points next year.
Investors are also keenly awaiting new data from the manufacturing industry, expected later on the same Wednesday, for additional insights.
Regarding other major currencies, the dollar has maintained a position close to its multi-month lows. However, it’s been making some gains against the Chinese yuan. This movement is linked to expectations that the Peopleforank of China might cut critical next year.
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