As the US Federal Reserve gears up for its policy meeting this week, investors think there is a possibility this central bank may reduce interest rates in March 2024. Consequently, all eyes will be on the Fed’s Chairperson, Jerome Powell, and any hints he may drop during the press conference.
Possible interest rate cuts looming on the horizon
Bloomberg reports inflation dipped below the 3% mark for the first time since 2021. On the back of a 2.9% inflation rate, consumer spending remains high, but there are concerns that this inflation margin will escalate prices again.
Despite this optimism, economists warned the monthly US jobs report, job openings and consumer data, and the quarterly employment cost index could either stay or sway the Fed’s interest rate decision. Bloomberg Economics said:
The stage is set for the Fed to take steps toward cutting rates in coming months. We expect the Fed to begin lowering the federal funds rate target range in March as it attempts to stick a soft landing.
Statistics plot a flatlined gross domestic product (GDP) growth in Canada. Central banks in the UK and Sweden seem set to keep interest rates unchanged, while three national banks in Latin America are expected to cut theirs.
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The International Monetary Fund (IMF) will publish fresh forecasts on Tuesday, 30 January. Along with the other information in this report, investors will also look at euro-zone inflation, GDP statistics, and Chinese surveys.
Since September last year, China’s manufacturing and service sectors have fallen short. This country publishes its purchasing manager indexes on Wednesday, which will also swing the needle on investor compasses.
