The Federal Reserve is expected to initiate a policy of cutting interest rates by 50 basis points per quarter, starting in the second quarter of calendar year 2024 (CY24), as there may be a slight economic slowdown in the United States during the first semester. of the coming year.
Nathan Sheets, global chief economist at Citi, anticipates this decision by the US Fed due to the expected economic slowdown.
Starting in the second quarter of 2024, the Federal Reserve’s actions will likely be influenced by economic data, inflation trends and global developments, Sheets predicts.
However, US Fed Chairman Jerome Powell shared a harsh message in August regarding the current state of inflation, saying it remained “too high” despite some recent declines. Powell, during his opening speech at the annual Jackson Hole symposium, warned that the US central bank was prepared to take additional steps to curb inflation, including further raising interest rates if it deemed it necessary .
“And we expect the Fed to cut rates at a pace of 50 basis points per quarter starting in the second quarter,” he said.
One of the main reasons for these aggressive rate cuts could be concerns about economic growth. Sheets’ outlook suggests the Federal Reserve sees the need to boost economic activity and job creation, especially if growth prospects appear slow or uncertain. Lower interest rates can encourage borrowing, spending and investment, which are essential elements of economic expansion.
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(Edited by : CH Unnikrishnan)
First publication: September 14, 2023 2:04 p.m. STI