The last few months have seen a significant change in the macroeconomic environment and the market debate has shifted from “how many more rate hikes?”, to “when (and how aggressively) will central banks cut rates?”
In December 2023, the US Federal Reserve’s latest dot plot (the interest rate projections of individual Federal Open Market Committee [FOMC] members) showed 75 basis points (bps) of cuts in 2024 and a further 100bps of cuts in 2025. While week-to-week we see volatility around market expectations for inflation and interest rates, the Fed and many other central banks have clearly signalled an intent to bring rates down over the next few years.
