(Reuters) -The U.S. Federal Reserve finally cut its interest rate by an oversized 50 basis points (bps) in its Sept 17-18 meeting that Chair Jerome Powell said was meant to show policymakers' commitment to sustaining a low unemployment rate now that inflation had eased.
In addition to approving the half-percentage-point cut, Fed policymakers projected the benchmark interest rate would fall by another half percentage point by the end of this year, a full percentage point next year, and half a percentage point in 2026, though they cautioned that the outlook that far into the future was inherently uncertain.
Following are forecasts from some major banks on economic growth, inflation, and how they expect certain asset classes to perform:
Forecasts for stocks, currencies and bonds:
S&P 500 US 10-year EUR/USD USD/JPY USD/CNY
target yield
target
Goldman Sachs 3.85% 1.08 150 7.20
6,000
Morgan Stanley 5,400(for 1 140 7.5
June 2025)
UBS Global 5,200 3.85% 1.09 148
Wealth 7.20
Management*
Wells Fargo 5,300-5,500 3.75%-4.25% 1.06-1.10 156-160
Investment
Institute
Barclays 5,600 4.25% 1.09 145 7.20
J.P. Morgan 4,200 3.55% 1.13 146 7.25
BofA Global 5,400 1.12 151
Research 3.50% 7.30
Deutsche Bank 5,750 1.07 135
3.80%
Citigroup 5,600 4.20% 7.20
1.02 141
HSBC 5,400 3.00% 1.05 145 7.10
Oppenheimer
5,900
UBS Global 4.0% 1.12 145 6.95
Research* 5,850
Evercore ISI 6,000
RBC 5,700
* UBS Global Research and UBS Global Wealth Management are distinct, independent divisions in UBS Group
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U.S. INFLATION
U.S. consumer prices rose slightly in August, but underlying inflation showed some stickiness amid higher costs for housing and other services.
U.S. inflation (annual Y/Y for 2024)
Headline CPI Core PCE
Goldman Sachs 2.6% 2.6%
Morgan Stanley 2.10% 2.70%
Wells Fargo 3.0% 2.60%
Investment
Institute
Barclays 2.9% 2.6%
J.P.Morgan 2.50% 2.50%
BofA Global 3.5% 2.8%
Research
Deutsche Bank 3.10%
Citigroup 2.0% 2.7%
HSBC 3.4%
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Real GDP growth forecasts for 2024
GLOBAL U.S. CHINA EURO UK INDIA
AREA
Goldman 2.7% 2.8% 0.7% 6.9%
Sachs
4.9% 0.9%
Morgan 2.8% 1.9% 4.2% 0.5% -0.1% 6.4%
Stanley
UBS Global 3.1% 2.4% 4.9% 0.6% 0.2% 7.0%
Wealth
Management*
Barclays 2.6% 1.2% 5.0% 0.3% 1.1% 6.2%
J.P.Morgan 2.6% 2.7% 4.6% 0.7% 1.1% 6.5%
BofA Global 2.7% 4.8% 0.7% 1.1% 7.1%
Research
3.1%
Deutsche 3.2% 4.7% 0.9% 1.2% 7.0%
Bank
2.7%
Citigroup 2.4% 2.0% 4.7% 0.7% 1.0% 7.3%
HSBC 2.6% 2.3% 4.9% 0.5% 0.4% 6.3%
UBS Global 3.1% 2.5% 4.6% 0.6% 1.1% 7.0%
Research*