• Tue. May 28th, 2024

Fed Could Cut Rates up to Five Times in 2025: Economist’s Forecast Aligns with Expectation of Gradual Interest Rate Cuts

BySamantha Nguyen

Mar 27, 2024
S&P Economist Predicts 5 Interest Rate Cuts in 2025 Due to Slowing US Economy

According to S&P Global Ratings’ global chief economist, the Federal Reserve could potentially lower interest rates up to five times in 2025. The prediction is based on the expectation of a slowing US economy, giving the Fed the opportunity to cut rates amidst cooling inflation. This would mean a total decrease of 2 percentage points in interest rates.

Despite some Wall Street analysts warning of prolonged high interest rates due to stubbornly high prices, Gruenwald’s forecast aligns with the expectation of Fed continuing to cut rates gradually. The unexpected acceleration of consumer prices in February and the potential for inflation to rise further this year present challenges, but could also provide opportunities for the Fed to intervene. If the labor market weakens significantly and unemployment rises, the Fed may need to cut rates more aggressively than currently anticipated.

Paul Gruenwald, the global chief economist at S&P Global Ratings, anticipates that the US economy, which has been experiencing rapid growth, will eventually start to slow down. In an interview with Yahoo Finance, Gruenwald suggested that the Fed could implement three rate cuts in 2024, followed by as many as five rate cuts in 2025. This forecast indicates a quicker pace of monetary easing compared to other economic predictions.

Even though productivity and investment in the US have been strong this year, Gruenwald believes that the economy will inevitably slow down. He projects that as growth starts to decline in the second half of the year, the Fed will respond by gradually lowering interest rates. The aim is to maintain a “slower-for-longer” approach as

By Samantha Nguyen

As a content writer at newsqwe.com, I am passionate about crafting engaging and informative articles that captivate our audience. With a background in journalism and a keen eye for detail, I strive to deliver content that is not only well-researched but also adds value to our readers' lives. From breaking news stories to in-depth features, I take pride in my ability to tell compelling stories that resonate with our diverse audience. When I'm not typing away at my keyboard, you can find me exploring new cafes, practicing yoga, or getting lost in a good book. I am thrilled to be a part of the newsqwe.com team and look forward to sharing my love for writing with all of our readers.

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