Title: Expert Analysis: Economic Growth Forecast Adjusted, Fed to Reach Terminal Policy Rate of 3.00-3.25%
Economic growth is slowing as expected, but recession risks remain low. Danske Bank macro analysts predict GDP growth at 2.5% in 2024 and 1.5% in 2025, with the Fed expected to reach a terminal policy rate of 3.00-3.25%.
According to analysts, potential output is growing due to increases in labor supply, productivity growth, and demand for manufacturing investments. However, risks to the outlook remain skewed to the downside, with weak consumer buffers and slow monetary policy pass-through.
Inflation forecasts have been adjusted slightly lower, with headline inflation expected to average 2.9% in 2024 and 2.2% in 2025. Core inflation is projected at 3.3% in 2024 and 2.4% in 2025. The Fed is expected to cut interest rates by 25bp at every meeting from September 2025 to June 2025, followed by two final cuts in the second half of 2025.
In summary, economic growth is slowing, but recession risks are low. The Fed is expected to reach a terminal policy rate of 3.00-3.25%, with inflation forecasts adjusted slightly lower. Consumers should be cautious due to weak buffers and slow monetary policy pass-through. Stay informed and be prepared for potential changes in the economic landscape.