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Updated January 26th, 2024 at 18:27 IST

Fed likely to cut rates by 125 bps in May 2024: CareEdge

The report also highlighted that the markets expect the ECB to cut the policy rate by 150bps in 2024.

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Fed Rate Cuts: All central banks across the world are sticking to the 'Higher For longer interest' rate regime, and in 2024 the Street is anticipating the rate cuts as the inflation is easing across the world. However, in its latest report, credit rating agency CareEdge said that the markets are expecting the Fed to begin rate cuts on May 24 (a shift from earlier Mar-24 expectation). The probability of a 125 bps rate cut in 2024 is increasing, against the 150 bps expected earlier.

According to CareEdge, the markets have revised their expectations of interest rate trajectories following higher inflation, a resilient labour market, and hawkish commentary from the central bank off. 

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The report also highlighted that the markets expect the ECB to cut the policy rate by 150bps in 2024 and BoE to cut by 100bps. In contrast, BoJ is expected to hike rates by 20bps in 2024. 

The US 2Y yield has increased by 4bps to 4.39 per cent and the US 10Y yield has increased by 24bps to 4.13 per cent over the last month, in response to the shift in market expectations.

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Indian Economy on the growth path

The report also projected the Indian economy to grow at 6.7 per cent in FY25. 

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“Growth in FY24 was supported by a strong performance in investment demand which is projected to grow by 10.3 per cent YoY,” the report mentioned further. 

According to the report, consumption demand decelerated from 7.5 per cent in FY23 to 4.4 per  cent in FY24, marking the slowest growth in the past two decades barring the pandemic year of FY21. 

 

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Published January 26th, 2024 at 13:39 IST

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