85% of U.S. economists: "There will be disagreements... but an interest-rate cut this week"

A survey found that U.S. economists expect the central bank (the Fed) to announce a rate cut this week.

On the 7th (local time), the Financial Times (FT) reported that, according to a survey conducted jointly with the Chicago Booth Clark Center, 85% of the 40 economists who responded expected that rates would be cut at the Fed meeting on the upcoming 9–10.

However, it was also widely expected that there would be internal disagreement over the rate cut. Only one respondent expected that all 12 voting members of the Federal Open Market Committee (FOMC) would unanimously support a rate cut.

Sixty percent of respondents expected two to oppose, and more than 30% forecast that three or more would oppose. There had been no instance of two dissenting votes at an FOMC meeting since September 2019. There has also been no instance of dissenting votes exceeding three since 1992.

The most likely dissenter was named as Jeff Schmid, president of the Federal Reserve Bank of Kansas City, who also cast a dissenting vote last October. FT also predicted that Susan Collins, president of the Boston Fed, and Austan Goolsbee, president of the Chicago Fed, could also cast dissenting votes.

FT noted that FOMC members have debated whether they should prioritize a labor market that is weakening relative to inflation — which has been above the Fed's 2% target since spring 2021 — when voting on this year's rate decisions.

In this survey, 48% of respondents said their priority was price control. Only 5% said the focus should be on jobs. The remainder hoped the central bank would consider both equally.

Also, regarding the impact on the U.S. economy if the New York market's flagship index, the S&P 500, fell 20% in a bear market, two-thirds of respondents expected "U.S. growth would weaken but would not be severe enough to cause a major recession." The rest expected a recession would be triggered by declines in consumption and investment.

O Se-sung, Hankyung.com reporter sesung@hankyung.com