Goldman Sachs Chief Economist Jan Hatzius has revealed he remains confident in the Federal Reserve’s plan to implement three interest rate cuts this year, despite recent comments from other Fed officials suggesting a wait-and-see approach.
In a Friday interview with CNBC, Hatzius expressed his optimism on the U.S. economy, forecasting growth to reach close to 3% in 2024. He believes this robust growth can occur alongside a slowdown in inflation, projecting the core personal consumption expenditures price index to fall to 2.4% by year’s end and 2% in 2025.
Notably, Minneapolis Fed President Neel Kashkari recently raised the possibility of no rate cuts in 2024 if inflation remains stubbornly high and if the central bank continues “to see inflation moving sideways,” while Fed Chair Jerome Powell has also indicated a data-dependent approach, leaving the timing of potential rate cuts uncertain.
Market participants are closely following these developments, with Friday’s jobs report expected to provide further clues on inflation and the labor market, although Hatzius has said he would be “very surprised” if the central bank decided not to cut interest rates.
Hatzius was quoted saying:
In that sort of environment, I would expect some rate cuts based on what Chair Powell and other Fed officials have said. That’s more uncertain. The timing of that of course is going to depend on near-term data, on the reaction function from the Fed, but under our forecast I would be quite surprised if we didn’t get rate cuts this year. Quite surprised.
The Fed maintained interest rates at their current range of 5.25% to 5.5% in their last meeting, in line with analyst expectations.
While the central bank signaled its intention to implement three rate cuts this year, market expectations have shifted, with traders seeing a near-certain chance of steady rates in May and only a 60% possibility of a cut in June, reflecting a more cautious outlook compared to previous weeks.
As CryptoGlobe reported, respect economist Dr. Nouriel Roubini, who is the Chairman and CEO of Roubini Macro Associates, provided a nuanced perspective on the global economic outlook, focusing on interest rate expectations, geopolitical risks, and the performance of the US economy
Roubini warned that the Federal Reserve could halt rate cuts or hikes amid the geopolitical-driven inflation.
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