US Federal Reserve Likely To Cut Interest Rates In The Second Half Of 2024, Says Oxford Economics CEO

According to Odaily, Adrian Cooper, CEO and Chief Economist of Oxford Economics, has predicted that the US Federal Reserve may start cutting interest rates in the second half of 2024, possibly in September. This decision will largely depend on changes in potential inflation, especially in relation to wage growth. In recent years, labor inflation expectations have risen rapidly, surprising the Federal Reserve and many central banks. This implies that workers are not only seeking pay raises to compensate for past higher-than-expected inflation but also because they believe that inflation may remain high. Cooper believes that the Federal Reserve wants to see decisive evidence that the process of inflation slowdown will continue, not only overall inflation but also core inflation will return to the 2% level, before it is truly ready for a significant rate cut. Many people believe that tight monetary policy will lead to a significant slowdown in US economic growth. However, with the rise in interest rates, the US launched major fiscal stimulus measures last year, such as the Inflation Reduction Act and the Chip Act, which largely offset the impact of US interest rate hikes. In addition, US consumers continued to spend excess savings last year. Although this process may have ended now, Cooper believes that the US economy is still healthy and it is unlikely to see a significant adjustment in the US economy. The US seems to be achieving a soft landing. This allows the Federal Reserve to be cautious about monetary policy and take time to make a decision on interest rate cuts. The US labor market is still quite healthy, and business investment is also quite healthy, driven by various tax measures and new technologies.