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GSAM chart of the week. The decline in inflation could justify an acceleration of monetary policy.
© Keystone
Falling inflation could justify an acceleration in monetary easing, which is why economists at Goldman Sachs Investment Research (GIR) are predicting five interest rate cuts of 25 points each by the US Federal Reserve in 2024.
Although risk-adjusted returns remain attractive, rapid monetary easing could lead to a decline in returns on short-term money market investments in the coming year. This could encourage inflows into stocks and longer-dated fixed income securities, as dollar money market fund assets stood at around $5.9 billion at the end of 2023, up 31% since the start of the Fed’s hike cycle.
Key interest rate (%)
History // GIR basic forecast
Three consecutive 25 basis point cuts in March, May and June 2024
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