Financial giant ING predicted that the Federal Reserve will begin lowering interest rates in the second quarter of next year. “We currently expect a rate cut of 150 basis points in 2024 and a further 100 basis points in early 2025,” said ING’s chief international economist, adding that US economic data showed “further tightening by the Federal Reserve.” “There is no need for a policy,” he confirmed.
ING’s outlook for a Fed interest rate cut
James Knightley, chief international economist at global financial services company ING, published an article last week explaining why he expects the Federal Reserve to begin cutting interest rates next year.
The economist cited US data showing moderate growth, cool inflation and a cool labor market, stressing that this is “exactly what the Fed wants to see.” He explained:
This would confirm that further tightening by the Fed is not necessary. We expect interest rate cuts from the Federal Reserve starting in the second quarter.
“We currently expect a rate cut of 150 basis points in 2024 and a further 100 basis points in early 2025,” he said.
ING economists highlighted that the number of initial unemployment claims rose to 218,000 last week, noting that “while initial claims remain low, continuing claims are clearly on the rise.” He added: “Essentially the message is that companies are reluctant to lay off employees but less willing to hire new ones. “In other words, more evidence that the labor market is cooling but not collapsing.”
Knightley said the October Personal Income and Expenditures report showed incomes and the core PCE deflator rising 0.2% month-on-month, suggesting inflationary pressures are “easing more broadly.” This means that “the annual core inflation rate has slowed from 3.7% to 3.5%, as expected,” he said.
The economist described spending as holding up but warned that the outlook was “deteriorating.” “Credit card delinquencies are on the rise as student loan repayment puts increasing financial pressure on millions of households,” he warned.
Weakening real household disposable income remains a key concern for growth in early 2024.
Do you agree with the predictions of ING’s Chief International Economist? Let us know in the comments section below.
Source: Bitcoin.com