Structural forces playing out now

Nov 4, 2024

The Federal Reserve is anticipated to cut interest rates soon, with insights from a Senior Economist at BlackRock highlighting recent economic data that align with these expectations. The discussion delves into the current market cycle and the contrasting strategies between the US and European monetary policies. Listeners gain an understanding of how these factors influence investment opportunities, particularly in European fixed income, hinting at a potentially bright outlook.

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INSIGHT

Rate Cut Predictions

The Federal Reserve is likely to cut interest rates again soon, but less than market expectations.
Sticky inflation, a solid labor market, and firm wage pressures support this prediction.

INSIGHT

Inflation Drivers

Recent inflation drops are partly due to easing pandemic supply shocks and a temporary boost in US labor supply from immigration.
While wage growth has slowed, it remains historically high, and structural forces could keep inflation sticky long-term.

INSIGHT

Long-Term Inflationary Pressures

Increased immigration helps support higher economic growth without fueling inflation.
However, structural forces like persistent budget deficits, aging populations, geopolitical fragmentation, and AI investments could counter this.

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The Federal Reserve is set to cut interest rates again this week. Nicholas Fawcett, Senior Economist at the BlackRock Investment Institute, discusses why recent economic data supports our policy expectations for the Fed.

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