Following overly positive forecasts at the end of last year, investor optimism about the pace of interest rate cuts by the world’s major central banks in 2024 has faded Finance Times.
The publication writes that the latest economic data and statements from regulators have dampened the excitement of the markets, which were overly bullish on expectations of a rapid easing of monetary policy in December.
After the Fed meeting in December, investors were expecting 6-7 interest rate cuts in 2024, but now this forecast has been reduced to 5-6 steps. The chance of the easing cycle starting in March is now estimated at 75%, compared to almost 100% a month ago.
Regulators’ wariness was also confirmed by the recently released Fed protocol, which turned out to be more hawkish than Federal Reserve Chairman Jerome Powell’s comments in December. Experts say that employment data in the US does not support the thesis that inflation is cooling rapidly.
A similar correction occurred in expectations regarding the ECB’s actions. Previously, the average interest rate cut in the euro area was expected to be 1.6 percent. In 2024, the forecast is currently 1.46 percentage points. The probability of a rate cut starting in March has also dropped to approximately 50%.
Before that the World Bank warned It’s about the third consecutive global economic slowdown.
Previously, the USA was planning to seize Russia’s assets worth $ 300 billion, but the EU had doubts.