Our previous prediction that the Federal Reserve would not cut interest rates until 2025 is now seemingly gaining traction among an increasing number of policymakers.

While this reinforces our base assumption, we remain hopeful that there could be at least one rate cut this year.

Recent comments from Fed Governor Michelle Bowman, as reported by CNN, align closely with our forecast. Bowman has stated her expectation that there will be no rate cuts this year, highlighting the potential risks of reducing rates too quickly.

“Reducing our policy rate too soon or too quickly could result in a rebound in inflation, requiring further future policy rate increases to return inflation to 2% over the longer run,” she said this week.

Bowman’s perspective is echoed by other key Fed officials. San Francisco Fed President Mary Daly recently reinforced the need for the Fed to remain adaptable. Daly noted that if inflation does not decrease as expected, the policy rate might need to stay higher for longer.

This apparent growing consensus among policymakers underscores the Fed’s commitment to stabilizing inflation over the long term, supporting our view that rate cuts may not occur until 2025.

Despite the annual CPI increase standing at 3.3%, which might have raised hopes for rate cuts among some market participants, the Fed’s cautious approach remains steadfast.

The Labor Department's recent CPI report showed stable inflation figures, leading to speculative pricing of potential rate cuts. However, as emphasized by Fed officials, one positive data point is insufficient to warrant a policy shift. This sentiment was reiterated by Fed Chair Jay Powell in the latest press conference.

While the growing feeling among some Fed officials supports our base assumption of no rate cuts until 2025, we remain hopeful that there could be at least one rate cut this year. Such a move would provide relief to borrowers, households and businesses and without undermining the progress made in controlling inflation.

However, this hope is tempered by the recognition that the Fed’s primary goal is to ensure sustainable economic growth and stability, which may require maintaining higher rates for a longer period.

As ever, investors and market participants will be poring over all Fed communications, as these will provide crucial insights into the future direction of monetary policy.

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London-born Nigel Green is founder and CEO of deVere Group. Following in his father’s footstep, he entered the financial services industry as a young adult. After working in the sector for 15 years in London, he subsequently spent several years operating within the international space, before launching deVere in 2002 with a single office in Hong Kong. Today, deVere is one of the world’s largest independent financial advisory organizations, doing business in 100 countries and with more than $12bn under advisement. It specializes global financial solutions to international, local mass affluent, and high-net-worth clients. In early 2017, it was announced that deVere would launch its own private bank. In addition, deVere also confirmed it has received its own investment banking license.