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Economic Research

Our economists are responsible for developing the macroeconomic forecasts and risk scenarios used by S&P Global Ratings' analysts during the ratings process, as well as leading key cross-sector and cross-divisional research projects.

Global

Global Economic Update: Policy And Exchange Rate Forecasts Revised On New Fed Funds Rate Expectations

Following the May 1 Federal Open Market Committee meeting, we revised our forecast for fed funds rate cuts, which we now expect will start in December this year and last into late 2026. We also revised our expectations for key U.S. government and mortgage interest rates. The cumulative amount of rate cuts we expect was unchanged.

The change in the fed fund rate path has led us to update our forecast for the policy rate, key interest rate, and exchange rate paths for some of the other economies we cover, generally mirroring the changes to the fed funds rate. Developed Europe is the main exception.

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Global Economic Outlook Q2 2024: Still Resilient, With Gradual Rate Cuts Ahead

The macroeconomic response to the higher rate environment is playing out largely as we anticipated (the U.S. outperformance is the notable outlier) with slower activity and falling inflation pressures. Resilient labor markets, reflecting relatively strong services demand and hoarding of employees, have tempered the slowdown and helped avoid recessions, at least so far.

Our baseline forecast has higher 2024 growth on the back of upward revisions to the U.S. and India and is predicated on labor demand remaining strong. Aside from sharply weaker services demand and a stronger U.S. dollar, geopolitics including a spate of elections, pose downside risks.

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