US Federal Reserve expected to make 2 rate cuts this year: Fitch

ISTANBUL

The US Federal Reserve is expected to make two interest rate cuts this year, according to Fitch Ratings on Monday.

The rating agency said it now expects a slightly slower pace of rate cuts from the Fed this year, compared to its expectations at the end of 2023.

“The latest US inflation and labor market data support our view that two reductions are likely in 2H24,” it added.

The Fed’s preferred annual inflation indicator, core PCE price index, remained unchanged at 2.6% in June, according to Commerce Department figures released Friday. The core PCE price index increased 0.2% in June, gaining pace from a 0.1% month-on-month increase in May.

The PCE price index, which includes food and energy prices, rose 2.5% annually in June, slightly slowing from a 2.6% annual gain in May. The index, on a monthly basis, increased 0.1% in June, after remaining unchanged in May.

Fitch said economic slowdown looms in the US due to heightened political, geopolitical uncertainty.

“Signs of a slowdown in the US are evident in weak credit growth and slowing consumer spending,” said the rating agency, and that it expects these to continue in the second half of this year, with headline real GDP growth decelerating.

• economic slowdown
• Fed rate cut
• Fitch Ratings
• US Federal Reserve