The US central bank will shift to cutting interest rates as soon as 2020, to counter a slowdown in growth as forecast by Capital Economics.
“Our long-held hawkish view that the Fed would be forced to hike interest rates twice in the second half of this year is now a firmly consensus view, even with a slim majority of the Fed’s own officials,” the firm’s three US economists, Paul Ashworth, Michael Pearce and Andrew Hunter, said in a nine-page report released last week.
“Where
we differ from the markets and particularly the Fed itself now is in
expecting an economic slowdown to force the Fed to begin cutting
interest rates in 2020.”
The three economists said that their calculations suggest that
second-quarter GDP growth in the US was “as strong as 4.5 per cent
annualised”, reflecting a rebound in consumption growth and a big
export-fuelled contribution from net external trade.
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