June 21, 2024

Global Chief Economist Predicts Potential Rate Cuts for US Economy Amid Slowdown and Rising Inflation

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S&P Economist Predicts 5 Interest Rate Cuts in 2025 as US Economy Slows

S&P Global Ratings’ global chief economist Paul Gruenwald predicts that the US economy may slow down, causing inflation to inch closer to the Fed’s 2% target. As a result, Gruenwald anticipates that the Fed could implement up to five rate cuts in 2025, potentially cutting rates by two full percentage points.

Gruenwald believes that the current surge in productivity and investment is not sustainable and expects the US economy to slow down. This prediction is more aggressive than what other economists are forecasting, as they expect interest rates to remain elevated for an extended period due to persistently high prices.

However, Gruenwald emphasizes the importance of gradual rate reductions, which he believes will help prevent a potential increase in unemployment. Despite this, some Wall Street forecasters believe that inflation could climb even higher this year, especially as the recent AI-fueled stock market surge may be exacerbating financial conditions without the assistance of the Fed.

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