Chief Economist Predicts 5 Rate Cuts by Fed in 2025 as US Economy Expected to Slow

Economic Slowdown Expected in the US: Will the Fed Lower Rates Five Times in 2025?

Jerome Powell reiterated the Fed’s commitment to supporting the economy in a recent statement. According to S&P Global Ratings’ global chief economist, Paul Gruenwald, the Fed could potentially lower rates up to five times in 2025 due to a slowdown in the US economy. This projection is based on the expectation of inflation cooling down and a drop in GDP growth rate.

Gruenwald believes that the US economy cannot sustain its current high level of growth indefinitely and anticipates three rate cuts in 2024 followed by up to five rate cuts in 2025. Despite a surge in productivity and investment this year, Gruenwald predicts that a slowdown is inevitable, bringing inflation back down to the Fed’s target rate of 2%.

According to S&P Global, the US economy will need to slow down eventually, with a forecasted slowdown in the second half of the year. While there are risks that could lead to more aggressive rate cuts, such as significant unemployment increases, Gruenwald still expects the Fed to lower rates gradually. This outlook contrasts with predictions from other Wall Street analysts who are concerned about high prices persisting for a longer period. Increases in consumer prices and potential inflation risks have sparked debate among economists on how the Fed should proceed.

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