Fed Rate Cuts Predicted for 2025 to Support Slowing US Economy, Say Experts

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

In a recent statement, Jerome Powell emphasized the Fed’s commitment to supporting the economy. According to S&P Global Ratings’ global chief economist, the Fed could potentially lower rates up to five times in 2025 due to a slowdown in the US economy. This projection is based on the expectation of inflation cooling down, which would allow for rate cuts.

Paul Gruenwald, the global chief economist at S&P Global Ratings, believes that while there has been a surge in productivity and investment this year, a slowdown in the economy is inevitable. He predicts that the Fed will issue three rate cuts in 2024 followed by up to five rate cuts in 2025 as inflation falls back to the Fed’s target rate of 2%.

Gruenwald forecasts a GDP growth rate of 2.5% by the end of 2024 but expects growth to slow down in the second half of the year. Despite this, he suggests that there are risks that could lead to more aggressive rate cuts if unemployment were to increase significantly. However, he still expects these cuts to occur gradually.

This outlook contrasts with predictions from other Wall Street analysts who are concerned about high prices persisting for longer periods. Increases in consumer prices and potential inflation risks have sparked debate among economists on how the Fed should proceed. Despite this uncertainty, Jerome Powell reiterated his commitment to supporting the economy through monetary policy measures such as lowering interest rates if necessary.

In conclusion, while there are concerns about high prices and potential inflation risks, Jerome Powell and Paul Gruenwald both believe that a slowdown in economic growth is inevitable and that rate cuts may be necessary to support it. While there are differences in their projections for how many times rates may be cut and when they will happen, they both agree that monetary policy must remain flexible and responsive to changing economic conditions.

As such, investors should continue to closely monitor developments in economic growth and inflation trends as well as any changes in monetary policy measures from central banks around the world. The ongoing debate among economists highlights just how uncertain future economic conditions remain and underscores the importance of staying informed about all relevant factors impacting markets today.

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