Six out of 10 US economists: “Fed to begin cutting rates in September”

WSJ Economist Survey

Six out of 10 U.S. economists expect the Federal Reserve to cut interest rates in September.

According to the Wall Street Journal (WSJ), an American economic daily, on the 18th (local time), in a survey of 68 economists conducted from the 5th to the 9th, 64.2% of respondents answered that the Fed would cut interest rates at the Federal Open Market Committee (FOMC) in September.

Next, 14.9% of respondents said the FOMC will cut interest rates in November, 13.4% in December, and 6% after 2025. Only 1.5% of respondents said the FOMC will cut interest rates this month.

The most common response, 45.6%, was September, followed by 24.6% who said July would be appropriate, and 12.3% who said November would be appropriate.

“Growth, inflation and employment in the U.S. are all cooling to a more sustainable pace,” said Joe Brusuelas, RSM U.S. economist. “This will likely prepare the Fed to cut rates further in the second half of the year.”

However, it was seen that the presidential election could be a variable for the future base interest rate. As previously reported by the WSJ, more than half of economists predicted that inflation and interest rates would rise if former President Trump won the November presidential election.

59.2% of respondents said that interest rates would rise if former President Trump wins, while only 16.3% said that interest rates would rise if President Biden takes office.

Inflation is cited as the cause. 56% of respondents said inflation would rise under former President Trump. Only 16% said prices would rise under President Joe Biden. Economists predict that inflation will rebound due to rising import prices if former President Trump, the “tariff man,” is re-elected.

The federal government deficit also increased when former President Trump was elected, with 51% of respondents saying it would increase further. Only 22.4% said it would increase when President Biden wins.

“As uncertainty surrounding the election outcome grows, downside risks increase due to a more gradual path of rate cuts and delayed investment,” said Diane Swonk, an economist at KPMG. “Policy uncertainty acts as a tax on the economy.”

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