Read the highlights of this week’s commentary from Helios:
- On Wednesday, the Federal Reserve kept interest rates unchanged at 5.25% to 5.5% and revealed most Fed officials expect one more rate hike this year. However, investors are skeptical about another rate hike, citing potential economic headwinds, such as rising gas prices, a UAW strike, and a looming government shutdown.
- Policymakers are anticipating fewer rate cuts in 2024 than previously expected, partly due to a stronger labor market. Their projections indicate inflation will drop below 3% next year and return to the 2% target by 2026, suggesting a potential ‘soft landing’ for the US economy.
- Inflation has moderated since a year ago, yet Americans continue to grapple with higher costs at gas pumps and in grocery aisles. There remains a disparity between policymakers, who see lower inflation indicators as progress, and consumers.
- The OECD’s September 2023 Economic Outlook Report is predicting a global economic slowdown due to interest rate increases and China’s underwhelming pandemic recovery. Global GDP growth is expected to be 3% in 2023 and 2.7% in 2024, marking the weakest annual expansion since the global financial crisis.
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