The US central bank announced lower interest rates this year. The new data makes the chief economist more confident that cuts will begin in March.
Kyrre Knudsen, Chief Economist at Sparebank 1 SR-Bank Photo: Pål ChristensenPublished: Published:
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At the previous interest rate meeting, the US central bank, the Federal Reserve (Fed), announced several interest rate cuts in 2024.
The Fed monitors key data that shows how the U.S. economy is doing and partially responds to it when setting interest rates. There were two such key figures on Thursday:
- A survey shows a continued decline in the industry. ISMIMSAcronym for “Institute for Supply Management”. It is a monthly gauge of activity in the U.S. economy based on a survey of purchasing managers at more than 300 manufacturing companies. for industry in the United States it was 47.4 in December. According to Trading Economics’ consensus forecast, an index of 47.1 was previously expected. A reading below 50 indicates a decline in industrial activity.
- Another shows the lowest number of vacancies in more than two years. There were 8.8 million job vacancies in the United States in November, down from 8.85 million in October. This is the lowest figure since March 2021. According to the Financial Times, 8.85 million vacancies were expected in advance.
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– Strengthens confidence in March cuts
– As expected, there is a decline in activity in industry, Kyrre Knudsen, chief economist at Sparebank 1 SR-Bank, said in a statement.
According to him the most interesting thing is that the drop in prices the drop in prices the industry survey indicates that commodity prices fell in December is significantly lower than expected.
– This means that inflation will likely continue to fall. Obviously this is good for interest rates, both in the US and possibly Norway. This strengthens confidence in an interest rate cut in the United States as early as March.
Jerome Powell, head of the American central bank. Photo: Susan Walsh/AP/NTB
– Small skin rashes
Knut A. Magnussen, senior economist at DNB Markets, believes the industry survey is neutral on the Fed’s setting of interest rates.
– The figures were slightly better than expected. There was a slight decrease in the prices paid, which can be perceived as a positive sign of inflation. But commodity prices have calmed down, so that’s not where the battle lies.
Magnussen instead believes that the vacancy data perhaps strengthens confidence in a rate cut in March. This is because the numbers have decreased.
– But there are small results. I don’t want to interpret the numbers too much, Magnussen tells E24.
The most important thing for the Fed is the inflation data coming next week, Magnussen points out.
Knut A. Magnussen, senior economist at DNB Markets Photo: Cicilie S. Andersen, E24
2024-01-03 16:28:12
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