📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Citi: 'Broader and significant' easing to start in H2

Published 2024-07-18, 05:34 a/m
US500
-

Recent data pointed to a growth slowdown in developed markets (DMs), primarily the United States, the euro area, and China.

According to Citi economists, the key question now is whether this deceleration is a temporary downturn or signals a more pronounced weakening.

“We conclude that global growth will likely soften a notch this year but broadly shake off the challenges,” economists said in a note.

“In recent years, solid growth has persisted despite unremitting headwinds, and we expect this resilience to continue,” they added.

Central banks are nearing a point where they will have more scope to cut rates significantly, which should serve as an additional stabilizing force, Citi noted.

More concretely, the Bank of England is expected to start easing in August due to tight monetary and fiscal policies restraining services inflation. The Federal Reserve is likely to begin its easing cycle in September, with the European Central Bank (ECB) continuing its cuts. The Bank of Canada appears set to cut rates at every meeting in the second half of the year.

"To date, such cuts have been restricted to some EM central banks and a tepid first move from the ECB and several other DM central banks. But we see the tide soon turning toward a broader and more significant easing cycle,” economists continued.

They project that global growth will slow to 2.4% this year from 2.7% last year. This softening is primarily among developed markets (DMs), where growth is expected to decline from 1.7%. Economists see global growth edging back up to 2.5% in 2025.

Global uncertainty has increased following the recent assassination attempt on former President Trump.

Even before this event, prominent Democrats were debating whether President Biden is well-positioned to counter Trump's growing candidacy.

In response, investors are increasingly adopting the "Trump trade" — curve steepeners, a strong dollar, and investments in sectors like energy and financials that may benefit from Trump's deregulation initiatives.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.