Global Central Banks to Begin Cutting Rates In Second Half; Says IMF

Global central banks will likely get onto the rate reduction trajectory in the second half of this year, predicts the IMF. The International Monetary Fund also predicted that controlled inflation and declining inflation would aid the rate-cut view for most banks in the world.

Global Central Banks to Cut Rates in Second Half

According to Yahoo Finance, as inflation starts to drop, global central banks will start lowering interest rates in the second half of the year, the International Monetary Fund said in a new projection.

The IMF predicted in its newly issued World Economic Outlook report that economic growth will continue to be robust. The IMF revised its January prediction for global growth to 3.2% this year, a tenth of a percent higher than expected.

The decline in “core inflation,” or the cost of products excluding volatile food and energy prices, is causing the global inflation rate to decline. This decline is being aided by rising interest rates, contracting employment markets, and respite from rising energy prices.

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US Fed Rate Cur Trajectory Still Dicey

Contrary to IMF’s predictions about global central banks, the Fed is still taking cues from various economic data points to understand the rate cut timing.  With 303K new employment added in March 2024—the biggest in ten months—the US economy outperformed market estimates of 200K and a downwardly revised 270K in February.

This suggests that the economy remains robust. The unemployment rate dropped from 3.9% to 3.8%, below market estimates. This points to the US labor market’s continued strength, which allows the Fed to justify rate decreases and buy them more time. The statistics led market players to anticipate that the Fed would seek to lower rates in September rather than June.

What is In For Crypto Markets?

Investors have historically depended heavily on the Federal Reserve’s rate choices when evaluating assets. Lower interest rates can occasionally cause government securities to lose value, which increases the appeal of alternative assets like Bitcoin.

The cryptocurrency markets would profit from increased risk appetite and strong purchasing power if the rate declined soon. This might support the notion of an ongoing Bitcoin boom.

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