JPMorgan’s Perspective on Inflation and Growth

The widespread anticipation of lower interest rates gained traction as inflation diminished in 2023, and the Federal Reserve hinted at a shift toward rate cuts during its December meeting.

As per the Fed funds futures market, traders are expecting a substantial 140 basis points of rate cuts this year. This figure is almost twice the amount indicated by the Fed’s interest-rate projections chart released in December. Central bank policymakers, as indicated in their quarterly dot plot, are forecasting a total of 75 basis points in cuts by the end of the year.

JPMorgan’s macro strategy team, led by Shrenick Shah, also suggested that the Fed’s dedication to addressing a potential resurgence in inflation is not fully recognized, which could create the possibility of a correction in risk assets.

“In our view, the market may be too optimistic as we see limited evidence of disinflation in certain areas that are a focus for the Fed, specifically core services inflation and wage data,” the strategists wrote in the note.” “Furthermore, continued resilience in U.S. growth may inhibit the disinflation process or even create upward pressure.” #Write2Earn #TrendingTopic #JUP