Fed’s rate cut forecast: S&P economist predicts up to five cuts by 2025

Chief Economist Predicts 5 Rate Cuts by Fed in 2025 as US Economy Expected to Slow

The Federal Reserve (Fed) has reaffirmed its commitment to supporting the economy in a recent statement, according to Jerome Powell. S&P Global Ratings’ global chief economist predicted that the Fed could potentially lower rates up to five times in 2025, based on the expectation of a slowdown in the US economy.

Paul Gruenwald, the global chief economist at S&P Global Ratings, expects the Fed to issue three rate cuts in 2024 followed by up to five rate cuts in 2025. The forecast implies that the Fed could lower rates by a total of 2 percentage points as inflation cools down. Gruenwald believes that a slowdown in the economy is inevitable and will likely bring inflation back down to the Fed’s target rate of 2%, paving the way for rate cuts.

S&P Global forecasts a GDP growth rate of 2.5% by the end of 2024, but with growth expected to slow down in the second half of the year. Despite a surge in productivity and investment this year, Gruenwald suggests that there are risks that could lead to more aggressive rate cuts, such as a significant increase in unemployment. However, he still expects the Fed to lower rates gradually and not aggressively. This outlook contrasts with predictions from other Wall Street analysts who are concerned about high prices persisting for a longer period. Increases in consumer prices and potential inflation risks have sparked debate among economists on how the Fed should proceed.

In summary, while there is concern about high prices persisting for a longer period among some Wall Street analysts, S&P Global Ratings’ global chief economist predicts that the Federal Reserve could potentially lower rates up to five times in 2025 due to an anticipated slowdown in the US economy and inflation cooling down.

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