© Reuters. Schroders: it is premature to talk about cutting interest rates, still risks of inflation
According to economist George Brown, the first rate cut could take place in June but at the moment there remain factors of uncertainty that could impact the price dynamics
The long awaited interest rate cut it might not take long. Especially in the United States we are seeing growth that is increasingly weakening and a job market that is normalizing. George BrownEconomist by Schroders (LON:), underlines how the delays between political action and the economy’s reaction seem to have lengthened, which is why the FOMC cannot afford to wait for full confirmation that the fight against inflation has been won. “We expect the first rate cut to take place in June – underlines the economist – followed by an easing at every other meeting until the end of 2024”. However, at the moment there remain factors of uncertainty that could impact the price dynamics.
TOWARDS THE NORMALIZATION OF MONETARY POLICY
Second Schrodersby the end of the year, the data should convincingly show that restrictive rates are no longer necessary, and from there on the Fed he can start cutting rates at every meeting to bring them back to neutrality. “According to our estimates it will be around 3.50%, assuming that the real neutral interest rate is between 1.25% and 1.50%,” he says Brown…
** This article was written by FinanciaLounge