That’s an outlook shared by Left Coast Leaders broker/owner Amir Nurani (pictured), who cautioned brokers against advising clients that the Fed’s rate will post a dramatic immediate fall. “The Fed still has PTSD from what happened during the COVID era when they smoked rates down to nothing and made money really, really cheap,” he told Mortgage Professional America in an interview conducted prior to Powell’s speech.
“The path down, I don’t think is going to be as aggressive. I don’t think we’re going to see 100-basis-point rate cuts. I think that what we’re going to ultimately see is 25-basis-point rate cuts… through the end of the year.”
Why an aggressive spate of rate cuts looks unlikely
The Fed’s desire to avoid another flareup in inflation, which it targeted through a flurry of aggressive rate hikes in 2022 and 2023, mean it’s likely to take a safety-first approach to rate cuts throughout the remainder of this year, according to Nurani.
If it grows increasingly confident that inflation is in the rearview mirror, he said, next year could see rates begin to fall at a faster clip, mirroring the Fed’s approach on rate hikes to begin with. “I think that as we go into 2025, we’ll start seeing acceleration,” he said. “It would make sense because when the Fed was tapering up, you saw more aggressive rate hikes in the beginning.
“They started slowing down to quarter-point rate hikes as they got closer to the peak. And so I think… lowering by small increments in the beginning [makes sense], and then if it warrants they will make larger cuts – maybe towards the back half of 2025.”
Source: mpamag.com