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

Potential Rate Cuts and Economic Slowdown: What the US Federal Reserve and Economists Say

The US Federal Reserve (Fed) has announced its commitment to supporting the economy, according to Jerome Powell. This comes as S&P Global Ratings’ global chief economist predicted that the Fed could potentially lower rates up to five times in 2025, based on expectations of a slowdown in the US economy.

Inflation is expected to cool down and the Fed may lower rates by a total of 2 percentage points. According to Paul Gruenwald, the global chief economist at S&P Global Ratings, the US economy cannot sustain its current high level of growth indefinitely. He anticipates that the Fed will issue three rate cuts in 2024 followed by up to five rate cuts in 2025.

The forecast implies that the US economy will need to slow down eventually, with a forecasted slowdown in the second half of the year. Despite a surge in productivity and investment this year, Gruenwald believes that a slowdown is inevitable. While there are risks that could lead to more aggressive rate cuts, such as a significant increase in unemployment, 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. However, some experts believe that higher interest rates could actually help reduce inflationary pressures and stabilize economic growth over time.

Overall, while there are differing opinions on how best to navigate these challenges, it’s clear that investors and policymakers alike must remain vigilant as they monitor economic conditions and make informed decisions about their investments and policies moving forward.


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