Oppenheimer Asset expects up to three US Fed rate cuts in second half this year

Oppenheimer Asset Management believes the US Federal Reserve might decrease interest rates two to three times this year. They think this could happen in the latter part of the year, possibly even as late as the fourth quarter.

After nearly 11 hikes over the past two years and four pauses, the US central bank is widely expected to leave interest rates unchanged for the fifth time in a row on March 20. But they might drop hints about when they are ready to start lowering rates.

John Stoltzfus, Managing Director and Chief Investment Strategist at Oppenheimer says the Fed might believe that after raising rates for the past two years, it has managed to control inflation effectively. This could lead to the end of increasing interest rates, avoiding a recession.

Fed swaps are pricing in less than 50% chance of a rate cut in June

In addition to hints about upcoming policy moves, the Fed will also begin in-depth discussions about its balance sheet this week, including when and how to slow the pace at which the central bank drains excess cash from the financial system.

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Since 2022, the Fed has been letting as much as $60 billion in Treasuries and as much as $35 billion in agency-backed mortgage debt mature each month and roll off its balance sheet, a process known as quantitative tightening.

(with input from Bloomberg)

For the entire interview, watch the accompanying video