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Interest Rates Outlook

Inflation rates posing obstacle to Fed rate cuts

Monday, 15 April 2024, written by Maarten Spek

The increasing upward pressure on inflation pushes the expectation of interest rate cuts by the Fed further and further back, reinforcing the upward pressure on long-term interest rates. The further long-term interest rates rise, the tighter financial conditions become and the greater the risk of a risk-off phase that could eventually lead to a sharp decline in interest rates.

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Previous reports

Recovery in goods sector increases upside potential for interest rates

Tuesday, 02 April 2024

Rising oil prices, an improving outlook for the goods producing sector and speculation of a higher inflation target for the Fed increase the short-term upside potential for long-term interest rates, but do not change our expectation of falling long-term rates later this year....

Central banks must deal with their legacy

Monday, 18 March 2024

As the downward pressure on inflation from diminishing supply side problems subsides, inflation could rise again due to ample financial conditions and large government deficits. As a result, according to some economists, the Fed will not cut interest rates this year. This is creating more upward pressure on long-term interest rates, but we don't see this lasting for long....

Scope for Fed rate cuts appears to be shrinking fast

Monday, 04 March 2024

With inflation falling less sharply than expected and financial conditions becoming looser, some analysts are wondering whether the Fed will cut interest rates this year at all ...

Past Predictions

Readers frequently inquire about the accuracy of our predictions and whether we track them. Naturally, we don't possess a crystal ball, and the primary objective of our analyses is to present our readers with the most probable scenarios in the medium term. However, we do provide specific exchange rate predictions and in general they have been quite accurate. 

Below are our forecasts for US and German 10-year government bonds for the period from January to December 2023.

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