NEWARK, NJ – There is no relief from inflation in sight, especially for consumers in New York and New Jersey, two of the states where the cost of living is already among the highest in America.
Combined with already high property taxes, sales tax, and other taxes that burden New Yorkers and New Jersey residents, the world is expecting more inflation, limiting the purchasing power of Americans, particularly those in our area.
A majority of economists are revising their interest rate forecasts amid persistent global inflation, according to a Reuters poll conducted between October 6 and October 25. While some central banks were previously expected to start cutting rates by mid-2024, a growing number of surveyed economists now predict these cuts are more likely to occur in the second half of 2024.
The poll, which included over 500 economists, revealed that inflation remains a significant concern, contradicting initial expectations that central banks, particularly the U.S. Federal Reserve, would have been cutting rates by this time. Despite efforts to tame inflation, prices continue to rise faster than most central banks find comfortable. Hitting inflation targets is becoming increasingly challenging.
According to the poll, 171 out of 228 economists said the risk of higher-than-forecast inflation is significant, compared to 57 who considered the risk lower. These results follow news that the U.S. economy grew nearly 5% in the third quarter of 2023, distinguishing it from many of its global peers. European Central Bank President Christine Lagarde recently cautioned that discussions of interest rate cuts are “totally premature.”
The Reserve Bank of New Zealand, often an early mover in the interest rate cycle, is now expected to hold off on rate cuts until the third quarter of 2024. Similarly, the Reserve Bank of Australia, Bank Indonesia, and the Reserve Bank of India have seen growing consensus among economists for delayed rate cuts. Even the Bank of Japan, known for its ultra-loose policy, is expected to abandon negative interest rates next year.
The revised outlooks indicate a broader shift in economic sentiment. Douglas Porter, chief economist at BMO, encapsulated the changing views, stating that while the prevailing forecast is that the Federal Reserve has done enough to control inflation, there remains a possibility that further action could be required.
This growing skepticism about rate cuts reflects broader uncertainties in the global economy, as central banks and market participants grapple with the long-term impacts of sustained inflation.