S&P Global Economist Predicts Fed to Lower Rates Up to Five Times in 2025 to Cool Inflation and Boost Economy

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

According to S&P Global Ratings’ global chief economist, Jerome Powell has emphasized the Fed’s commitment to supporting the economy. The economist predicts that the Fed could potentially lower rates up to five times in 2025 due to a slowdown in the US economy. This projection implies that the Fed could lower rates by a total of 2 percentage points as inflation cools down.

Paul Gruenwald, the global chief economist at S&P Global Ratings, believes that the US economy cannot sustain its current high level of growth indefinitely. He anticipates that the Fed will issue three rate cuts in 2024 followed by up to five rate cuts in 2025. Despite a surge in productivity and investment this year, Gruenwald believes that a slowdown in the economy is inevitable, and this will likely bring inflation back down to the Fed’s target rate of 2%.

Gruenwald suggests that the US economy will need to slow down eventually, with a forecasted slowdown in the second half of the year. 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.

Leave a Reply