Fed signals US interest rate cuts in 2024, the first since 2020

Expect lower loan repayments, cheaper imports here due to rising Singapore dollar

- Ovais Subhani

Strong signs that there will be three interest rate cuts in the United States in 2024 will result in lower loan repayments for borrowers here, while a rising Singapore dollar will make imports cheaper.

The United States Federal Reserve said on March 20 that it will leave the benchmark rate in a range of 5.25 per cent to 5.5 per cent - the highest level since 2001 - but it signalled that rate cuts are on the cards this year for the first time since March 2020.

Most private economists expect a rate cut in June, followed by at least two more in 2024.

However, those forecasts had been seen as risky, given US inflation figures for January and February came in higher than expected, raising the prospect that the Fed could dial back its projection of cuts in 2024.

In a nod to sticky inflation, the Fed did revise its median estimate for 2024 inflation up to 2.6 per cent from 2.5 per cent; still, the central bank kept the path to three rate cuts for the year unchanged.