2024 outlook on global inflation remains uncertain

Diana Estafana Rubio

2024 outlook on global inflation remains uncertain

With inflation impacting markets and international interest rates for more than a year, the outlook on inflation remains uncertain. However, the International Monetary Fund (IMF) expects most advanced economies to begin gradually easing interest rates by mid-2024.

Using the World Economic Outlook forecast data as of October 2023, the IMF projected central bank policy rates for four major economies. Since 2022, interest rates have climbed in the EU, the UK, and the US by at least four percentage points.

In 2023, rates have continued to climb slower and are expected to peak at the start of 2024. The US Federal Reserve, for example, is expected to see interest rates peak around 5.4% before beginning to implement rate cuts in Q3 2024.

On the other hand, Japan has held interest rates at 0% or slightly lower since 2016. The Japanese economy has struggled with weak consumer demand over the past few decades. Some worry that raising interest rates will make economic recovery more challenging in the long run.

Future rate cuts will largely depend on whether inflation in countries continues to decelerate. Significant developments, such as the war on Gaza, can also disrupt global markets and force central banks to change course.

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