The U.S. Federal Reserve is anticipated to lower interest rates twice in 2024, according to Fitch Ratings. The rating agency expects the rate cuts to occur in September and December of that year.
The global capital market company said a soft landing is likely with moderating inflation and low unemployment, and the ratings agency projected annual economic growth of 2.1 percent, down from 2.5 percent in 2023.Â
U.S. prices increased moderately in June as declining costs of goods offset a rise in the cost of services, underscoring an improving inflation environment that economists and analysts expect could prompt the Fed to begin cutting rates in September.
Read more: Will faster than expected Q2 U.S. economic growth set stage for potential Fed rate cut?
The report from the Commerce Department on July 26 showed consumer spending slowed somewhat last month. Signs of easing price pressures and a cooling labor market could boost the confidence of Fed officials that inflation is moving toward the U.S. central bank’s 2 percent target.
US rate rises in 2023 have begun to show some effect on the labour market and demand, while politics remains an area of high uncertainty, and geopolitical risk is here to stay. Learn more in our new report: https://t.co/AVKDYiPw5l #USPF pic.twitter.com/XqVeqoAAhY
— Fitch Ratings (@FitchRatings) July 31, 2024
Moreover, Fitch stated that U.S. consumer spending continues to hold up well, but it anticipates a slightly weaker credit environment in the second half of the year.
The comments follow earnings reports from several major U.S. banks, payments, and consumer companies, which indicated a weakening environment for U.S. consumers, with pressure building on the lower-income bracket.
Last week, economic data revealed that the U.S. economy grew at a quicker-than-anticipated rate in the second quarter. This expansion was fueled by robust increases in consumer spending and business investment. However, inflationary pressures seemed to be easing, potentially paving the way for the Federal Reserve to lower interest rates in September.
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