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

by | Feb 5, 2024 | Business

(Reuters) -Global growth will likely slow this year, but a dovish tilt in the Federal Reserve’s stance 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 on economic growth, inflation, Fed policy and how they expect certain asset classes to perform.

Real GDP growth forecasts for 2024

GLOBAL U.S. CHINA EURO UK INDIA

AREA

Goldman 2.6% 4.8% 0.7% 0.6% 6.2%

Sachs

2.9%

Morgan 2.8% 1.9% 4.2% 0.5% -0.1% 6.4%

Stanley

UBS Global 2.6% 1.1% 4.4% 0.6% 0.6% 6.2%

Wealth

Management

Barclays 2.6% 1.2% 4.4% 0.3% 0.1% 6.2%

J.P.Morgan 2.2% 1.6% 4.9% 0.4% 0.3% 5.7%

BofA 2.8% 1.4% 4.8% 0.5% 0.1% 5.7%

Global

Research

Deutsche 2.4% 0.6% 4.7% 0.2% 0.3% 6.0%

Bank

Citigroup 1.9% 1.0% 4.6% -0.2% 0.1% 6.3%

HSBC 2.4% 1.7% 4.9% 0.5% 0.6% 6.0%

—-

U.S. inflation and Fed forecasts:

The latest data showed that in the 12 months through December, U.S. consumer prices edged 3.4% higher after increasing 3.1% in November, tempering expectations of an interest rate cut in March.

The pace of price rises, however, has slowed from a peak of 9.1% in June 2022. The Fed targets an inflation rate of 2%.

The U.S. central bank’s policy 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 4%-4.25%

2.50% 2.2%

Morgan Stanley 2.10% 2.70% 4.375%

UBS Global 4.50-4.75%

Wealth

Management

Wells Fargo 2.80% 2.60% 4.50-4.75%

Investment

Institute

Barclays 2.70% 2.4% 4.25-4.50%

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

BofA Global 2.80%

Research 4.50%-4.75%

Deutsche Bank 2.10% 3.63%

Citigroup 2.0% 4.25%

HSBC 3.10% 4.50-4.75%

—–

Forecasts for stocks, currencies and bonds:

S&P 500 US 10-year EUR/USD USD/JPY USD/C

target yield NY

target

Goldman Sachs 5,100 1.10 150.00 7.15

4.00%

Morgan Stanley 4,500 1 140 7.5

UBS Global 5,000 3.50% 1.12 140 7.00

Wealth

Management

Wells Fargo 4,800-5, 4.25-4.75% 1.08-1.1 136-140

Investment 000 2

Institute

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 3.00% 1.05 136 7.10

(Compiled by the Broker Research team in Bengaluru; Editing by Sriraj Kalluvila, Paul Simao, Anil D’Silva and Arun Koyyur)

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