Today’s news / US growth slowdown may lead to rate cuts
At an interest rate meeting in March, the US central bank decided to keep the interest rate steady in the range of 5.25-5.50. Thus, the Fed has not changed the interest rate in more than half a year. (Archive photo). Photo: Kevin Lamarque/Reuters

US growth slowdown may lead to rate cuts

The US economy grew at a 1.6% annual rate in the first quarter, falling short of the expected 2.5% growth. Søren Kristensen, Chief Economist at Sydbank, suggests this may prompt the Federal Reserve to consider rate cuts later in the year, given the ‘noticeable’ slowdown. From Q4 2023 to Q1 2024, the economy expanded by approximately 0.4%, the weakest since 2022 outside two pandemic quarters. Inflation remains a concern with PCE inflation rising to 3.7% in Q1 from 2% the previous quarter, potentially complicating the path to rate reductions. In March, US inflation reached 3.5% annually, surpassing expectations, while the Fed kept rates unchanged at 5.25-5.50%.