• Wed. May 22nd, 2024

S&P Global Economist Forecasts Potential Fed Rate Cuts in 2024-2025 Amid Economic Slowdown and Inflation Pressure

BySamantha Jones

Mar 28, 2024
Chief Economist Predicts 5 Rate Cuts in 2025 as US Economy Expected to Slow, Says the Fed

The Fed’s commitment to supporting the economy is undeniable, as emphasized by Jerome Powell. Despite predictions that the Fed could potentially cut rates five times in 2025, Paul Gruenwald, the global chief economist at S&P Global Ratings, suggests that a slowing US economy may give the Fed an opportunity to make these cuts. With expectations of lowering rates by 2 full percentage points as inflation cools, Gruenwald believes that the current hot pace of growth is not sustainable in the long term.

The global chief economist anticipates three rate cuts in 2024 and possibly up to five rate cuts in 2025, totaling a two percentage point reduction in interest rates over 21 months. While there are risks that could affect this forecast, such as a significant downturn in the labor market leading to higher unemployment, Gruenwald remains cautious about his prediction of the Fed’s rate-cutting strategy. This outlook contrasts with some Wall Street analysts who believe that rates may remain elevated for longer due to persistent high prices.

In light of unexpected inflation acceleration in recent months, economists are closely monitoring inflation levels and their potential impact on financial conditions. However, the general sentiment is that the Fed will likely continue its path of gradual rate cuts based on economic indicators and inflation trends. Despite seeing a surge in productivity and investment this year, Gruenwald believes that the economy will inevitably slow down and prompt the Fed to act to counter rising inflation and bring it back to its target of 2%.

By Samantha Jones

As a content writer at newsnnk.com, I weave words into captivating stories that inform and engage our readers. With a passion for storytelling and an eye for detail, I strive to deliver high-quality and engaging content that resonates with our audience. From breaking news to thought-provoking features, I am dedicated to providing informative and compelling articles that keep our readers informed and entertained. Join me on this journey as we explore the world through the power of words.

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