The US economy is heading towards a recession this year, according to leading research firm Capital Economics. Analysts say the economic slowdown will force the Fed to cut interest rates more aggressively than the markets are currently pricing in.
The strong job growth and core inflation that kept the Fed in a hawkish mood will soon disappear as the economy weakens and the downward trend in core inflation accelerates, Capital Economics said in a report released today.
“We think interest rates will eventually come down faster than the markets currently expect,” the report said.
The FedWatch tool, which tracks market expectations for the CME's Fed policy, shows that traders anticipate a rate cut from January or March next year.
Bank of America CEO Brian Moynihan told CNN he expects a mild recession in the first half of 2024.
*Not investment advice.