Economy

Factbox-What to expect in 2024: Fed pivot, cooling inflation, easing growth

Published

1 year ago

December 19, 2023

Factbox-What to expect in 2024: Fed pivot, cooling inflation, easing growth

(Reuters) -Global growth will likely slow in 2024 but a dovish tilt in the Federal Reserve’s rhetoric has raised hopes for the U.S. economy and brightened the outlook for riskier assets, according to big banks.

The European Central Bank and the Bank of England sticking to their higher-for-longer rates stance, however, has blurred expectations for Europe.

Following are forecasts from some major banks and peers on economic growth, inflation, Fed policy and how they expect certain assets classes to perform.

Real GDP growth forecasts for 2024

GLOBAL U.S. CHINA EURO UK INDIA

AREA

Goldman 2.60% 2.10% 4.80% 0.90% 0.6% 6.3%

Sachs

Morgan 2.80% 1.90% 4.20% 0.50% -0.1% 6.4%

Stanley

UBS Global 2.60% 1.10% 4.40% 0.60% 0.6% 6.2%

Wealth

Management

Barclays 2.60% 1.20% 4.40% 0.30% 0.1% 6.2%

J.P.Morgan 2.20% 1.60% 4.90% 0.40% 0.2% 5.7%

BofA 2.8% 1.4% 4.8% 0.50% 0.1% 5.7%

Global

Research

Deutsche 2.4% 0.6% 4.7% 0.20% 0.3% 6.0%

Bank

Citigroup 1.9% 1.1% 4.6% -0.20% -0.30% 5.7%

—-

U.S. inflation and Fed forecasts:

Latest data showed that in the 12 months through November, U.S. consumer prices increased 3.1%, slowing from a peak of 9.1% in June 2022. The Fed targets an inflation rate of 2%.

The central bank’s main rate currently stands in the 5.25%-5.50% range after 525 basis points of hike since March 2022. Rate cuts are seen coming as early as March.

U.S. inflation (annual Federal funds

Y/Y for 2024) target rate (Dec

’24)

Headline CPI Core PCE

Goldman Sachs 2.40% 2.50% 4%-4.25%

Morgan Stanley 2.10% 2.70% 4.375%

UBS Global 4.50%-4.75%

Wealth

Management

Wells Fargo 2.50% 2.60% 4.75%-5.00%

Barclays 2.70% 4.5%-4.75%

J.P.Morgan 2.50% 2.50% 4%-4.25%

BofA Global 2.80% 4.25%-4.50%

Research

Deutsche Bank 2.10% 3.63%

Citigroup 2.60% 4.50%

—–

Forecasts for stocks, currencies and bonds:

US 10-year USD/C

target yield NY

target

Goldman Sachs 5,100 4.55% 1.10 150.00 7.15

Morgan Stanley 4,500 1 140 7.5

UBS Global 4,700 3.50% 1.12 140 7.00

Wealth

Management

Wells Fargo 4,600-4, 4.75%-5.25 1.08-1.1 136-140

800 % 2

Barclays 4.25% 1.09 145 7.20

J.P.Morgan 4,200 3.75% 1.13 146 7.15

BofA Global 5,000 4.25% 1.15 142 6.90

Research

Deutsche Bank 5,100 4.10% 1.10 135

Societe 4,750 3.75% 1.15

Generale

Citigroup 5,100 4.30% 1.02 135 7.25

HSBC 5,000

As of 1504 GMT on Dec. 18, 2023:

S&P 500: 4736.41

US 10-year yield: 3.9614%

EUR/USD: 1.0926

: 7.1348

USD/JPY: 142.97

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

12 months ago

December 26, 2023

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.

The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.

Economy

China identifies second set of projects in $140 billion spending plan

Published

12 months ago

December 25, 2023

China identifies second set of projects in $140 billion spending plan

© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo

SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.

With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.

The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.

China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.

The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.

“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.

The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.

($1 = 7.1315 renminbi)

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

12 months ago

December 25, 2023

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.