Global Macro Research
MacroeconomicsThe monthly macro outlook Video - May 2024
In our monthly macro video for May, Felix Feather, an economist in the Global Macro Research team, discusses why we think inflation will weaken this year despite a shifting consensus.
Author
Felix Feather
Economist
Date: 14 May 2024
Key points
- US home prices and rents show signs of easing, while the labour market is cooling. This will give room for the US Federal Reserve to cut interest rates.
- The Fed will deliver two cuts this year – in September and December. The European Central Bank and Bank of England are likely to start cutting earlier in June. Dollar strength will only postpone cuts in emerging markets.
- On the other hand, the Bank of Japan will raise interest rates, in part to arrest the yen’s slide against the dollar.
A ‘no landing’ scenario poses the biggest risk to this forecast. Robust growth combined with stubborn inflation may prolong central bankers’ headache.- Higher oil prices and shipping costs linked to tensions in the Middle East, and a potential Donald Trump presidency in the US, could contribute to inflationary pressures.
