December 14, 2023
United States:
Fed Prepares to Shift to Rate Cuts in 2024 as Inflation Eases
The Federal Reserve pivoted toward reversing the steepest interest-rate hikes in a generation after containing an inflation surge so far without a recession or a significant cost to employment.
While Chair Jerome Powell said Wednesday policymakers are prepared to resume rate increases should price pressures return, he and his colleagues issued forecasts showing that a series of cuts would be likely next year. Powell said the topic came up at their meeting, where the Fed decided to keep rates at a 22-year high for a third straight time.
Europe:
ECB Rate-Cut Pushback to Hinge on New Forecasts
After ramping up borrowing costs for more than a year, all eyes will now be on how forcefully the European Central Bank pushes back against bets on interest-rate cuts.
The extent of its resistance will hinge on fresh projections for the euro-zone economy — arriving on the heels of a surprisingly steep slump in inflation. That outlook may also help the ECB decide whether to hasten its exit from quantitative easing by phasing out reinvestments under the €1.7 trillion ($1.8 trillion) pandemic-era PEPP initiative.
Asia:
China’s Economy Seen Weakening on Drags From Deflation, Property
China’s economy likely lost some momentum in November, raising expectations for Beijing to ramp up stimulus in the new year.
Data due Friday is expected to show industrial output weakening from October and a contraction in property investment worsening as efforts to support growth have yet to take hold. Deflationary pressures remain a concern, casting a shadow over any uptick in year-on-year retail sales growth.
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