Jerome Powell and Paul Gruenwald: The Gradual Approach to Rate Cuts for a Slowing US Economy

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

In a recent statement, Jerome Powell emphasized the Fed’s commitment to supporting the economy. According to S&P Global Ratings’ global chief economist, the Fed could potentially lower rates up to five times in 2025. This projection is based on the expectation of a slowdown in the US economy, which would give the Fed the opportunity to make these rate cuts.

Paul Gruenwald, the global chief economist at S&P Global Ratings, believes that while there has been a surge in productivity and investment this year, a slowdown in the economy is inevitable. He anticipates that the Fed will issue three rate cuts in 2024 followed by up to five rate cuts in 2025. With growth expected to slow down in the second half of the year, Gruenwald suggests that inflation will cool down and bring it back down to the Fed’s target rate of 2%.

However, there are risks that could lead to more aggressive rate cuts, such as a significant increase in unemployment. Despite these risks, Gruenwald still expects the Fed to lower rates gradually. He believes that while high prices may persist for a longer period, they will not sustain themselves indefinitely. This outlook contrasts with predictions from other Wall Street analysts who are concerned about high prices persisting for a longer period.

Overall, Jerome Powell and Paul Gruenwald agree that supporting economic growth is crucial for maintaining stability. While there are some concerns about inflation risks and potential job losses, they believe that gradual rate cuts can help mitigate these challenges and ensure continued growth for years to come.

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