US investors remain optimistic amid expectations of interest rate cuts, geopolitical concerns
Date
7/16/2024 8:36:20 AM
(MENAFN) In July, US investors continued to display optimism, driven by the expectation that US interest rates would soon be lowered to avoid a severe economic downturn. However, they now perceive geopolitical developments as the primary risk to this positive outlook. According to a bank of America survey conducted on Tuesday, which included responses from 242 global fund managers managing assets worth USD632 billion, there was a notable decline in global growth expectations. This measure saw the largest monthly drop since March 2022, falling from -6 percent to -27 percent.
The survey results suggest that investors anticipate an imminent reduction in interest rates, interpreting current monetary policy as being at its tightest since November 2008. This belief is rooted in the view that easing these policies will result in a "soft landing" for the economy. Supporting this sentiment, US Federal Reserve Chairman Jerome Powell expressed confidence that the US economy would not face a recession or significant economic upheaval. Speaking at the Economic Club of Washington on Monday, Powell stated, "A hard landing is not the most likely scenario, nor is it the most likely scenario."
Powell also emphasized his belief in the possibility of reducing inflation without adversely affecting the labor market, highlighting recent progress in controlling price increases. He noted that the three inflation readings from the second quarter of this year indicated "further progress" towards achieving the Federal Reserve's target range. These comments hint that a shift towards lowering interest rates may soon be on the horizon, reinforcing investor optimism despite the looming geopolitical uncertainties.
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