Fitch predicts US Fed to implement 2 interest rate cuts in 2024
Date
7/30/2024 5:44:12 AM
(MENAFN) On Monday, Fitch Ratings projected that the US Federal Reserve is likely to implement two interest rate cuts later this year. The agency adjusted its earlier expectations from the end of 2023, now anticipating a slightly slower pace of rate reductions. Fitch's updated outlook is supported by the latest US inflation and labor market data, which align with their view that two rate cuts are probable in the second half of 2024.
According to figures released by the Commerce Department, the Fed's preferred inflation measure, the core PCE price index, held steady at 2.6 percent in June. This index, which excludes food and energy prices, showed a 0.2 percent month-on-month increase in June, an acceleration from the 0.1 percent rise recorded in May. In contrast, the broader PCE price index, which includes food and energy, rose 2.5 percent annually in June, down slightly from a 2.6 percent increase in May. On a monthly basis, the PCE price index increased by 0.1 percent in June, recovering from no change in May.
Fitch also highlighted the potential for an economic slowdown in the US, driven by increased political and geopolitical uncertainties. The agency pointed to weak credit growth and slowing consumer spending as indicators of this trend. Fitch anticipates these factors will persist in the latter half of the year, contributing to a deceleration in headline real GDP growth.
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