Economists Predict Inflation and Rate Cuts: S&P Global Chief Economist Foresees Three to Five Rate Cuts in 2024-2025

In recent months, economists have been closely monitoring inflation levels and the potential impact of the stock market on financial conditions. Despite seeing a surge in productivity and investment this year, S&P Global Ratings’ global chief economist, Paul Gruenwald, believes that the US economy will inevitably slow down, prompting the Fed to act to counter rising inflation and bring it back to the target of 2%.

Gruenwald anticipates three rate cuts in 2024, followed by possibly up to five rate cuts in 2025, totaling a two percentage point reduction in interest rates over 21 months. While there are risks that could affect this forecast, such as a significant downturn in the labor market leading to higher unemployment, Gruenwald remains cautious in his prediction of the Fed’s rate-cutting strategy.

Jerome Powell emphasized the Fed’s commitment to continue supporting the economy amidst predictions that the Fed could potentially cut rates five times in 2025. However, Gruenwald’s outlook contrasts with some Wall Street analysts who are warning that rates may remain elevated for longer due to persistent high prices.

Despite these differences of opinion, all experts agree that inflation levels are closely being monitored and its potential impact on financial conditions is being closely watched. As such, it is likely that the Fed will continue its path of gradual rate cuts based on economic indicators and inflation trends.