A Cut Heard Around the World

The Federal Reserve implemented its first rate cut of the cycle during the September 2024 meeting, reducing the Federal Funds Rate by 50 basis points to 4.875%. Adjustments in the accompanying statement included a change in language regarding job gains, which were described as having "slowed." The Committee indicated a greater confidence that inflation is trending towards the 2% target, with a balanced assessment of risks related to employment and inflation.

Future projections from the Committee suggest an additional 250 basis points of cuts through 2026, with 50 basis points expected in 2024 and 100 in 2025. Federal Reserve Chair Jerome Powell characterized the initial cut as a catch-up rather than a new standard pace and emphasized that future rate decisions will be data dependent.

Neuberger Berman anticipates a cycle of 25 basis point cuts at each meeting, depending on trends in the labor market which will influence the rate of policy adjustments.