The Blubber

The Federal Reserve will cut interest rates 6 times in 2024 as the economy shows clear signs of cooling down, per ING.

An economy displaying clear signs of slowing down may prompt the Federal Reserve to cut interest rates at least six times in 2024, according to a note from ING Economics. Factors such as moderating inflation, a cooling jobs market, and a deteriorating consumer spending outlook suggest that the Fed might need more interest rate cuts than what the market anticipates. ING's chief international economist,

James Knightley, expects the Fed to initiate interest rate cuts in the second quarter of the next year, delivering up to six 25-basis-point rate cuts totaling 150 basis points. He also envisions the interest rate cuts extending into 2025 with at least four 25-basis-point cuts. The gradual rate cuts proposed by Knightley indicate a resilient economy, avoiding an immediate drop to 0%, which often occurs during a significant economic slowdown or recession.

Despite a solid job market, Knightley notes a noticeable cooling trend, with firms being reluctant to hire new workers. Additionally, consumer spending faces challenges in 2024 as real household disposable incomes show weakness, credit-card delinquencies rise, and student-loan payments create further strain.

The overall assessment points to an economy on shaky ground, potentially avoided through successful interest rate reductions by the Fed.