Fed Forecasts and Rate Cuts: Impact on S&P 500, Inflation, and Interest Rates

Forecasts for the Federal Reserve's interest rate cuts in 2024 have become more important than S&P 500 price targets for investors. Strategists at UBS predict a 2.75% rate cut starting in March, while Goldman Sachs expects rate cuts to begin in the fourth quarter of 2024. Morgan Stanley sees a cumulative 100 basis points rate cut starting in June, while Barclays expects a rate cut in December and a rate hike in January. The Fed itself will release updated forecasts next month. The consensus is that the Fed will cut rates in 2024, and any surprises in the path of interest rates could have a significant impact on financial markets. Lower interest rates generally lead to higher stock prices, but rate cuts in response to a recession pose challenges for the stock market.