Economic growth is slowing largely in line with our expectations, but we believe recession risks remain low. We make only marginal adjustments to our forecast profile and see GDP growth of 2.5% in 2024 (from 2.3%) and 1.5% in 2025 (unchanged), Danske Bank macroeconomic analysts note.
The Fed will reach a terminal policy rate of 3.00-3.25%
“Potential output continues to grow at an accelerated pace, supported by increases in labor supply, solid productivity growth, and fiscal policy-driven demand for manufacturing investments.”
“Risks to the outlook remain somewhat skewed to the downside. The currently low savings rate indicates that consumer buffers remain weak. The slow transmission of monetary policy and the high share of fixed-rate mortgages suggest that rate cuts will not provide a quick boost to economic growth if the outlook deteriorates faster than we expect.”
“Inflation forecasts have been adjusted modestly lower. We see headline inflation averaging 2.9% in 2024 (from 3.2%) and 2.2% in 2025 (from 2.5%) and core inflation averaging 3.3% in 2024 (from 3.4%) and 2.4% in 2025 (from 2.6%). We now expect the Fed to cut interest rates by 25 bps at each meeting from September through June 2025 (previously only at every other meeting since September), followed by two final cuts in the second half of 2025 (terminal rate 3.00-3.25%; previously 3.75-4.00%).”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
