S&P Economist Predicts 5 Interest Rate Cuts in 2025 Due to Slowing US Economy

In an interview with Yahoo Finance, S&P Global Ratings’ global chief economist Paul Gruenwald predicted that the US economy, which has been experiencing rapid growth, will eventually start to slow down. According to Gruenwald, the Federal Reserve could potentially lower interest rates up to five times in 2025 in response to a slowing US economy and cooling inflation. This would mean a total decrease of 2 percentage points in interest rates.

Gruenwald believes that productivity and investment in the US have been strong this year, but he projects that the economy will inevitably slow down as growth starts to decline in the second half of the year. He suggests that the Fed will respond by gradually lowering interest rates in order to maintain a “slower-for-longer” approach as the economy recalibrates.

Despite some Wall Street analysts warning of prolonged high interest rates due to stubbornly high prices, Gruenwald’s forecast aligns with the expectation of Fed continuing to cut rates gradually. The unexpected acceleration of consumer prices in February and the potential for inflation to rise further this year present challenges, but could also provide opportunities for the Fed to intervene. If the labor market weakens significantly and unemployment rises, the Fed may need to cut rates more aggressively than currently anticipated.

By Sophia Gonzalez

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