“Not Quite The Matterhorn”: What’s Ahead For Interest Rates

“Not Quite The Matterhorn”: What’s Ahead For Interest Rates
Carl Hazeley

about 2 months ago1 min

If you’ve been warily wondering when all these interest rate hikes might stop, investment giant abrdn has good news. In the latest update to its macroeconomic outlook, it predicts that key rates in developed markets – notably the US, Europe, and the UK – will stay at or around the current rates, until the second half of next year.

This chart shows where the key interest rates or ’ “policy rates” have been for the world’s biggest central banks, along with abrdn’s forecasts. And it shows that rates in the US and the UK are set to level off for a while and then gradually slide in the second half of next year. As abrdn’s economists describe it, it’s “not quite Table Mountain, not quite the Matterhorn”.

If those economies can avoid a recession (which could happen in the US) or if inflation remains more stubborn than expected (as is pretty likely in the UK), rates could stay higher for longer than abrdn’s forecasting.

On the other hand, if the US does fall into a recession or inflation does come well and truly under control, that could mean quicker and deeper interest rate cuts.



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