Fed Rate Cuts Expected in 2025 as Global Economy Slows, Says S&P Global Ratings’ Chief Economist

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

The US economy is expected to slow down in the next few years, leading to potential rate cuts by the Federal Reserve (Fed). According to S&P Global Ratings’ global chief economist, Paul Gruenwald, the Fed could lower rates up to five times in 2025. This projection is based on the belief that the US economy cannot sustain its current high level of growth indefinitely.

Gruenwald expects the Fed to issue three rate cuts in 2024 followed by up to five rate cuts in 2025. With inflation cooling down as a result of a slowdown in the economy, he believes that the Fed could lower rates by a total of 2 percentage points. However, despite a surge in productivity and investment this year, Gruenwald anticipates that a slowdown in the economy is inevitable.

The forecast implies that GDP growth will likely slow down to 2.5% by the end of 2024. While there are risks that could lead to more aggressive rate cuts, such as a significant increase in unemployment, Gruenwald still expects the Fed to lower rates gradually. 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, Jerome Powell emphasized the Fed’s commitment to supporting the economy during his recent statement. S&P Global Ratings’ global chief economist has predicted that the Fed could potentially lower rates up to five times in 2025 due to a slowdown in economic growth and cooling down inflation. Despite an anticipated slowdown, Gruenwald believes that productivity and investment will continue growing this year while inflation risks persist.

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