Fed Chair Jerome Powell: US Economy Predicted for Multiple Rate Cuts in Coming Years

According to S&P Global Ratings’ global chief economist, Paul Gruenwald, the US economy’s current hot pace of growth is not sustainable in the long term. This has led to predictions of multiple rate cuts in the coming years. 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. Despite seeing a surge in productivity and investment this year, Gruenwald believes that the economy will inevitably slow down.

Jerome Powell, chairman of the Federal Reserve (Fed), emphasized the Fed’s commitment to continue supporting the economy amidst these predictions. He acknowledged that there are risks that could affect this forecast, such as a significant downturn in the labor market leading to higher unemployment. However, Powell remains cautious and believes that it is too early to make any decisions about potential rate cuts. He also highlighted the need for continued economic growth and stability as he plans for his next term at the Fed.

Despite some Wall Street analysts warning that rates may remain elevated for longer due to persistent high prices, economists are closely monitoring inflation levels and their impact on financial conditions. Inflation acceleration in recent months has caused unexpected fluctuations in stock markets around the world. However, overall sentiment remains that the Fed will likely continue its path of gradual rate cuts based on economic indicators and inflation trends.