PGIM Chief Global Economist Daleep Singh noted in the report that Federal Reserve Chairman Powell may suggest a more aggressive rate cut strategy at the Jackson Hole meeting.
Last week's U.S. CPI and PPI data showed that inflation remains stubbornly above 3%. Among them, the number of components in the CPI that are above 4% is comparable to those below 2%, a situation that has not occurred since the inflation peak in 2022. In this context, PGIM remains confident in its forecast, expecting the Federal Reserve to cut rates by a total of 100 basis points by next year, about 50 basis points lower than current market expectations.
If this forecast comes true, it will have widespread implications for financial markets. More aggressive rate cuts may push bond yields further down, while also putting pressure on the dollar exchange rate, thereby affecting global asset allocation and international trade among many other areas.
