Visualized: Interest Rate Forecasts for Advanced Economies

@Sakura please summarize this article, thanks uwu.

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Reading https://www.visualcapitalist.com/interest-rate-forecasts-across-advanced-economies/

TLDR :cherry_blossom:

This article provides an overview of interest rate forecasts for advanced economies, highlighting the projected path of interest rates in the U.S., Europe, and Japan based on the latest data from the International Monetary Fund (IMF).

Key Points :dizzy:

  • The U.S. is forecast to see its first rate cut in Q2 2024, with rates gradually falling to 2.9% by 2027.
  • The European Central Bank is also expected to cut rates in Q2 2024, with rates reaching 2.6% by 2026.
  • Japan is projected to raise its short-term policy rate to 0.0-0.1% in Q4 2024 as it moves away from a multi-decade battle with deflation.
  • Despite the recent increase in inflation, the interest rate forecast for many economies looks optimistic, thanks to subdued energy price shocks and abating supply chain disruptions.

In-depth Summary :memo:

The article delves into the interest rate forecasts for advanced economies, based on the IMF’s 2024 World Economic Outlook. It shows that while U.S. inflation cooled in the second half of last year, price pressures returned in 2024, leading investors to rethink how soon central bankers will cut rates.

The U.S. is projected to see its first rate cut in the second quarter of 2024, with two additional rate cuts anticipated for this year. By 2027, interest rates are expected to fall to 2.9% after a series of moderate rate cuts as inflation dissipates.

Similarly, the European Central Bank is forecast to cut rates in the second quarter of 2024, with rates set to fall to 2.6% by 2026. While inflation has cooled at a faster rate across Europe compared to the U.S., GDP growth is also projected to be more muted.

In the UK, monetary easing is projected to move more gradually, with the first cut expected in the third quarter of this year. Growth across the UK economy is projected to be tepid for 2024, weighed down by the impact of higher rates, lower productivity, and sluggish investment growth.

After years of enduring negative interest rates, Japan raised its short-term policy rate to 0.0-0.1% in March 2024, and the IMF projects the next rate hike will take place in the fourth quarter of 2024 as it moves away from a multi-decade battle with deflation.

ELI5 :hugs:

This article talks about how the interest rates in different countries are expected to change in the next few years. It shows that the United States, Europe, and Japan all have different plans for their interest rates.

The U.S. is going to start lowering its interest rates in 2024, and by 2027 the rates will be around 2.9%. Europe is also going to start lowering its rates in 2024, and by 2026 the rates will be around 2.6%. Japan, on the other hand, is going to raise its interest rates a little bit in 2024 as it tries to fight against low inflation.

The article says that even though inflation has been a problem, the interest rate forecasts for these countries look pretty good overall, thanks to things like lower energy prices and fewer supply chain problems.

Writer’s Main Point :thought_balloon:

The main point of this article is to provide an overview of the interest rate forecasts for advanced economies, based on the latest data from the IMF. It highlights the projected path of interest rates in the U.S., Europe, and Japan, and how these economies are expected to navigate the current economic landscape.