ING Economics forecasts significant interest rate cuts, anticipating six reductions in 2024 and 2025, contrasting the recent rate hikes. The prediction is driven by a cooling economy, highlighted by a sluggish labor market, easing inflation, and a slowdown in consumer spending, which has stagnated real incomes. This outlook aligns with the Fed’s objectives, indicating no further tightening is necessary. Other experts, like Bill Ackman and UBS, offer varied forecasts, with Ackman warning of a potential “hard landing” if rates aren’t lowered soon. Atlanta Federal Reserve President Bostic maintains a cautious stance, suggesting modest rate cuts later in 2024. The impact on housing could see increased demand with lower rates, potentially unlocking the market from the “lock-in” effect.
Bottom line: ING predicts significant rate cuts, while others advise caution and expect modest adjustments later in the year.
Neal's take
I chose this article simply to point out that ING is too bullish. Every week, I see articles confidently predicting 5-6 rate cuts this year. I am not sure if this is click-bait or if these analysts truly see something that we are missing. We continue to predict that the Fed is likely to cut 4 times this year, and 6 rate cuts are highly unlikely. Even 4 rate cuts will help the commercial real estate industry, including apartments, so they are very welcome, but we don’t expect to see ‘normal’ rates for 8 quarters or 2 years, and our proformas for Mission 10K assume fairly high interest rates in 2025.