The economic outlook for 2024 is taking an unexpected turn as economists at Macquarie have revised their predictions for interest rates, now suggesting a potential hike.
What Happened: In a recent note, Macquarie’s strategists indicated that the likelihood of a Federal Reserve interest rate cut in 2024 is minimal, with the possibility of an interest rate hike, reported business Insider.
The economists had previously projected a series of significant rate cuts, driven by a slowdown in core inflation and a concerning rise in unemployment. However, the economic landscape has since shifted, with signs of inflation rebounding and a resilient U.S. economy, primarily fueled by consumer activity.
“Fresh U.S. data has prompted our U.S. economist to push out his projection of the start of the Fed’s easing cycle to 2025. We also don’t rule out that the next change may be a hike, which would prompt a new wave of broad-based U.S. dollar strength,” Macquarie said in a note on Monday.
The recent release of first-quarter GDP growth and PCE inflation data has further indicated persistent inflation and strong corporate earnings, suggesting a solid foundation for the U.S. economy.
See Also: Federal Reserve Meeting Preview: High Interest Rates ‘Need More Time To Work,’ Bank of America Says
These developments have led to a notable change in interest rate forecasts, with the Federal Reserve itself suggesting that its initial projection of three interest ...