Fitch Ratings forecasts interest rate cuts

However, Fitch Ratings awaits confirmation of sustained inflation decline before the banks implement policy easing.

According to the most recent projections by Fitch Ratings for the Governing Council of the European Central Bank and the Federal Open Market Committee (FOMC) of the US Federal Reserve, both the FOMC and the ECB are anticipated to reduce interest rates by 75 basis points (bp), or three times, by the conclusion of the current year.

However, Fitch Ratings is awaiting additional evidence that the recent decline in inflation is permanent before the implementation of policy easing by either central bank.

Fitch revised its initial estimate of June as the month in which the FED would implement its initial interest rate reduction to July. Similarly, the initial interest rate reduction scheduled by the ECB was transferred from April to June.

Fitch Ratings Upgrades Global Economic Outlook

Fitch Ratings raised its projection for global GDP growth in 2024 by 0.3 percentage points to 2.4% in its Global Economic Outlook (GEO) Report, published in March 2024.

This signifies a “significant increase in the growth estimate for the United States from 1.2% in the December 2023 GEO to 2.1%.”

The revision for the United States surpasses the marginal reduction from 4.6% to 4.5% in China’s growth prognosis for 2024, as well as the decrease from 0.7% to 0.6% in the Eurozone forecast.