Factbox-Brokerages shift Fed rate-cut expectations to September after consumer price data

(Reuters) -Several global brokerages have pushed back their expectations of the U.S. Federal Reserve starting to lower interest rates to September from June following a bigger-than-expected rise in March consumer prices, with some seeing a cut only in December.

The consumer price index (CPI) rose 0.4% last month and increased 3.5% on an annual basis. That compared with expectations of 0.3% gain on the month and 3.4% on a year-on-year basis, according to a poll of economists by Reuters.

The report comes after a stronger-than-expected jobs data in March, as well as a drop in the unemployment rate to 3.8% from 3.9% in February.

Markets are now pricing in a 19.4% chance of the Fed cutting rates in June, compared with 50% before the CPI data, according to CME FedWatch tool, while betting on a 44.4% chance for July and 67.8% for September.

Barclays, UBS Global Wealth Management, TD Securities, Wells Fargo are among brokerages shifting their view of the first rate cut to September, while Goldman Sachs, BNP Paribas and Jefferies have pushed it to July from June.

Here are the forecasts from major brokerages following the March CPI data:

Brokerage First cut in Number of cuts Quantum of cuts in Fed funds target

in 2024 2024 rate at end 2024

Goldman Sachs July 2 - -

J.P. Morgan July - - -

BofA Global Research 1 25 bps -

December

Barclays September (25 bps) 1 25 bps 5.00-5.25%

UBS Global Wealth Management * September (25 bps) 2 50 bps 4.75-5.00%

TD Securities September (25 bps) 2 50 bps 4.75-5.00%

Wells Fargo September (25 bps) 3 75 bps 4.50-4.75%

Standard Chartered Q3 (most likely 2 50 bps 4.75-5.00%

July)

RBC Capital Markets December (25 bps) 1 25 bps 5.00-5.25%

Jefferies July - - -

BNP Paribas July 2 - -

HSBC June 3 75 bps

4.50-4.75%

Deutsche Bank December 1 - -

Macquarie December 1 25 bps

5.00-5.25%

Citigroup June - - -

Here are the forecasts from major brokerages before March CPI data:

Brokerage First cut in Number of cuts Quantum of cuts Fed funds target

in 2024 in 2024 rate at end 2024

Goldman Sachs June (25 bps) 3 75 bps 4.63%

J.P. Morgan June (25bps) 3 75 bps 4.50-4.75%

BofA Global Research June 3

Deutsche Bank June 100 bps 4.25-4.50%

UBS Global Wealth June (25 bps) 3 75 bps 4.50-4.75%

Management *

UBS Global Research * June (25 bps) 3 75 bps 4.50-4.75%

Morgan Stanley June (25 bps) 4 100 bps 4.38%

* UBS Global Research and UBS Global Wealth Management are distinct, independent divisions in UBS Group

(Compiled by the Broker Research team in Bengaluru; Editing by Savio D'Souza, Sriraj Kalluvila and Alison Williams)