When Will the Fed’s First Rate Cut Come? Citi Analyst Reveals

Citi economist Veronica Clark and Bleakley Advisory Group’s CIO Peter Boockvar evaluated the current state of the economy, market trends and the FED’s view of interest rates in their recent conversation on CNBC.

Clark announced that investors can expect the first round of interest rate cuts from the FED around June.

The speech took place just hours before the latest GDP figures were released, with economists predicting 2% growth in the fourth quarter. This rate, which was significantly slower than the approximately 5% growth observed in the previous quarter, has sparked debate over its potential effects on the market and the Fed’s future actions.

Peter Boockvar offered a comprehensive analysis of the economic landscape, raising the dilemma between high-end consumers who continue to spend strongly on travel and entertainment, and low- and middle-income consumers who show signs of prioritizing spending. Boockvar pointed to specific examples, such as consumers opting for fewer new tires and choosing lower-end options to save money.

Boockvar expressed concerns about the lagging impact of higher interest rates, which he said could limit growth this year and next.

Veronica Clark agreed that the economic scenario was mixed and emphasized the slowdown in the labor market towards the end of last year. Clark cited low hiring rates and rising consumer defaults as indicators of a potential economic slowdown. Despite the seemingly excellent quarter of 2%, the impact of labor market data and policy decisions on economic activity needs to be examined more closely, Clark said.

When the discussion turned to the potential trajectory of interest rates, Clark and Boockvar shared their perspectives. Clark stated that according to current trends, investors can expect the first interest rate cut in June and that the cuts will continue in subsequent meetings.

Boockvar warned against excessive interest rate cuts and suggested that a more measured approach might be necessary.

*This is not investment advice.

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