Based on its predictions, the IMF believes that many central banks around the world will begin reducing interest rates in the second part of this year. Inflation is anticipated to remain under control and even decline, supporting the case for rate reductions.
Global Central Banks to Cut Rates in Second Half
Based on information from Yahoo Finance, the IMF predicts that central banks around the world will decrease interest rates towards the end of the year as inflation begins to decline.
According to the latest World Economic Outlook report released by the IMF, the global economy is anticipated to maintain strong expansion with a projected growth rate of 3.2%, which is 0.1 percentage points more than previously forecasted in January.
Core inflation, which refers to the price change of non-food and non-energy items, is currently decreasing, leading to a drop in the overall global inflation rate. Factors contributing to this decrease include climbing interest rates, shrinking labor markets, and a reprieve from escalating energy costs.
US Fed Rate Cur Trajectory Still Dicey
Instead of going against the IMF’s forecasts, the Fed is still paying close attention to economic indicators to determine when to make interest rate cuts. In March 2024, an impressive 303,000 jobs were added – the most in ten months – surpassing market expectations of 200,000 new jobs and a revised 270,000 in February.
The economy is showing signs of resilience based on recent data, as the unemployment rate fell from 3.9% to 3.8%, surprising experts. This strong labor market performance gives the Federal Reserve the grounds to consider reducing interest rates and buying themselves more leeway. Consequently, investors are expecting the Fed to make this move in September instead of June.
What is In For Crypto Markets?
Historically, investors have relied significantly on the Federal Reserve’s decisions regarding interest rates to assess their investments. When interest rates drop, the value of government securities may decline, making other investment options such as Bitcoin more attractive.
If the interest in taking risks increases and buying power becomes robust, the cryptocurrency markets could experience significant gains when rates decrease. This situation may reinforce the idea that the Bitcoin surge is continuing.
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2024-04-16 23:36