Global Economy's Growing Resilience at Odds with Rate Cut Expectations

• Optimism about global growth prospects this year and next is building among hundreds of economists polled by Reuters. Risks are still tilted toward higher inflation, even as they cling to their forecasts for interest rate cuts.
• While most major central banks successfully tamed sky-rocketing inflation rates with rapid rate hikes last year, a resilient global economy with strong employment and wage growth has kept risks of a price pressure resurgence alive.
• A 56% majority of the economists (114 of 202) that participated in a global poll covering nearly 50 top economies said inflation was more likely to be higher than they forecast for the remainder of the year than lower. So too with rates.
• The global economy was forecast to grow 3.1% in 2024 and 2025, an upgrade from the 2.9% and 3.0% forecast in an April poll, roughly aligning with the International Monetary Fund's latest prediction.
• Growth rates for 24 of the 48 top economies surveyed were upgraded from three months ago. 13 of the 24 were developed economies, where there were concerns about flagging demand while the remaining were 11 in emerging economies.
• 18 economies saw a downgrade and 6 were left unchanged. Still, according to the survey, economists expect the U.S. Fed, and the Bank of England, to cut rates twice this year and the European Central Bank thrice.

 (Source: Reuters)