LIVE MARKETS-If the Fed's ok with rising PCE, Macquarie's Doyle sees more chance of a 2025 rate cut

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IF THE FED'S OK WITH RISING PCE, MACQUARIE'S DOYLE SEES MORE CHANCE OF A 2025 RATE CUT

While the U.S. Federal Reserve left interest rates unchanged after its meeting on Wednesday, Macquarie economist David Doyle is bringing forward his own estimate for when the next interest rate cut will happen.

Doyle pointed out in a research note after the meeting that the FOMC's dot plot for the end of 2025 still implies 50 basis points of cuts by year-end 2025 even as it pointed to higher inflation by raising its core PCE forecast. However he noted that the plot had whittled down 2026 cuts to a 25 bps from the 50 bps suggested in March.

The economist pointed to "willingness of FOMC participants to continue to project 50 bps of cuts despite projecting more elevated core PCE inflation" for his own shift in timing for rate cut expectations.

Doyle now expects a 25 bps cut in December and another in 2026 vs his previous estimate for 50 bps of cuts in 2026. It should perhaps be noted that Fed Chair Powell said in his press conference that nobody was holding a great deal of conviction in the dot plot.

Doyle saw the most meaningful shift in the statement in the suggestion that uncertainty had "diminished but remains elevated" while it had peaked in April.

(Sinéad Carew)

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