BANK OF E ASIA: Expects the Federal Reserve to cut interest rates by 0.25% each quarter in the first half of the year
The Chief Economist of Bank of East Asia, Cai Yongxiong, stated that he expects U.S. inflation to moderate but remain above the policy target for some time. He anticipates that in the first half of 2025, the Federal Reserve will reduce interest rates by a quarter of a percentage point each quarter, and the pace of rate cuts may slow further thereafter. To avoid excessive market liquidity tightening, he expects adjustments to the balance sheet to occur around mid-2025. Overall, he predicts that U.S. monetary policy will continue to shift from tightening to neutral. He also mentioned that in 2025, the European Central Bank is expected to cut rates at least once a quarter by a quarter of a percentage point, totaling a 1 percentage point reduction for the year. He indicated that the U.S. economy is expected to outperform in 2024, with a growth rate of 2.5% for the entire year, exceeding its trend growth rate. He noted that the incoming President Trump will take office in January 2025, and the Republican Party has successfully gained control of both the House and Senate, making it likely that most of Trump's policy proposals will be passed. Trump's MAGA policies primarily focus on strengthening U.S. domestic interests, which may stimulate economic growth but could also increase inflationary pressures and affect the future pace of Federal Reserve rate cuts. Looking ahead to 2025, the U.S. economy is expected to grow slightly above trend at 1.9%
According to the Zhitong Finance APP, the Chief Economist of Bank of East Asia (00023), Cai Yongxiong, stated that he expects U.S. inflation to moderate but remain above the policy target for some time. He anticipates that the Federal Reserve will reduce interest rates by a quarter point each quarter in the first half of 2025, with the pace of rate cuts potentially slowing thereafter. To avoid excessive market liquidity tightening, he expects adjustments to the balance sheet reduction around mid-2025. Overall, he predicts that U.S. monetary policy will continue to shift from tightening to neutral. He also mentioned that the European Central Bank is expected to cut rates at least once by a quarter point each quarter in 2025, totaling a 1% reduction for the year.
He indicated that the U.S. economy is expected to outperform in 2024, with growth projected to reach 2.5%, above its trend growth rate. The incoming President Trump will take office in January 2025, and the Republican Party is expected to successfully gain control of both the House and Senate. It is anticipated that most of Trump's policy proposals will likely be passed. Trump's MAGA policies primarily focus on strengthening domestic interests, which may stimulate economic growth but could also increase inflationary pressures and affect the future pace of Federal Reserve rate cuts. Looking ahead to 2025, the U.S. economy is expected to be slightly above trend growth, reaching 1.9%.