“We expect 75 bps of rate cuts in 2024 as monetary policy remains restrictive, growth will slow down, and inflation data do not alter our projections.”
Macroeconomic focus
2024: a more challenging context for the Fed’s pivot
We have markedly revised up our forecast for US growth, in particular for H1 2024. We continue to expect GDP growth to decelerate below its potential pace over the next few quarters, before recovering in 2025. Regarding inflation, although the downward trend in core CPI inflation has recently stalled, we think that the disinflationary process will continue, albeit along a bumpy road with stickier dynamics. The Fed will still be in a position to pivot towards rate cuts and we expect 75 bps of cuts in 2024 (vs 40 bps by markets) as: 1) monetary policy remains restrictive and will become more restrictive as inflation declines; 2) growth will slow down; and 3) recent inflation data have not altered our year-end projections.
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