Our Take

  • At its June meeting, the Fed maintained its measured and economic data-dependent approach to monetary policy.
  • Chairman Powell’s press conference remarks were guarded and cautious not to place undue emphasis on the recent improvement in both labor and inflation readings.
  • Although the Fed’s median short term rate forecast expects just one 25 basis point rate cut in 2024 (compared to an expectation of three from the prior meeting), the Fed’s 2026 Federal Funds Rate median forecast remained unchanged from the prior meeting at 3.125%. Thus, the Fed continues to anticipate over 200 basis points in rate cuts over the next 30 months. 
  • The recent PCE, CPI, and PPI reports were better than expected from an inflationary perspective, while labor readings showed further signs that the labor market may be weakening with the unemployment rate hitting 4.0% in May for the first time since January 2022.
  • Economic data reports to be issued prior to the next Fed meeting on July 30-31 could provide the Fed the confidence it is seeking that inflation is sufficiently contained. A rate cut in September could be possible if inflation data continues to trend lower and the labor market continues to move into better balance.

Important Disclosures
The thoughts, opinions, and outlook contained in the “Our Take” section are solely those of AGNC Investment Corp. (“AGNC”) management and are being shared for informational purposes only and should not be construed as investment advice. Neither the Federal Reserve nor any other third party has contributed to or been involved in AGNC’s preparation of these materials. AGNC does not endorse or adopt the views of the Federal Reserve or any third party.

Investment in AGNC involves risks and uncertainties that may cause future performance to vary from historical results. Please refer to our annual and quarterly reports on file with the SEC and available on our website or at www.sec.gov for more information about AGNC, including material risks and other factors that may affect future performance.