Mary Daly, president of the San Francisco Federal Reserve, is calling for a ‘prudent’ approach to setting borrowing costs and believes it is time for the US central bank to consider cutting interest rates. She cites recent signs that inflation is easing and expresses confidence that the economy is on its way to price stability. Daly’s comments come ahead of a meeting of central bank chiefs in Jackson Hole, Wyoming, where investors will be looking for hints on how quickly the Fed will lower borrowing costs to avoid a recession.
In other financial news, the Bank of England’s recent interest rate cut has already stimulated the UK property sector, with a 19% increase in potential buyers contacting estate agents since the rate cut in August. This boost in buyer activity has led property portal Rightmove to raise its forecast for asking prices to rise slightly by 1% in 2024. Additionally, the US dollar has weakened to a seven-month low following Daly’s comments about potential rate cuts.
On the energy front, consultancy Cornwall Insight forecasts a further modest increase in the energy price cap in January 2025, driven by recent spikes in wholesale prices. The UK’s reliance on imported energy leaves it vulnerable to global events that could disrupt supply, leading to higher energy bills for households and businesses.
Goldman Sachs has revised its odds of a US recession within the next 12 months down to 20% from 25%, citing positive economic data such as low weekly jobless claims and increased retail sales in July. The bank had raised the odds of a recession earlier in August but has now reduced them due to more recent data showing no signs of economic downturn.
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