The world’s largest investment banks expect global economic growth to slow further in 2023 following a year roiled by the Ukraine conflict and soaring inflation, which triggered one of the fastest monetary policy tightening cycles in recent times.
The U.S. Federal Reserve has increased interest rates by 375 basis points this year since rolling out its first hike in March, sparking worries about a recession.
Morgan Stanley sees the Fed delivering its first rate cut by December 2023, taking the benchmark rate to 4.375% by the end of that year. Barclays sees the rate between 4.25% and 4.50% by the end of next year, while Deutsche Bank sees it at 4.625% after a rate cut.
UBS expects U.S. inflation to be “close enough” to the Fed’s 2% target by the end of 2023 for the central bank to consider rate cuts.
Wells Fargo expects the Fed to begin its easing cycle in early 2024. BofA sees the rate between 2.75% and 3.00% by the end of 2024.
Most banks see the euro falling below parity to the dollar during the year, before clawing back by year-end.
Source: Reuters
