It (USA) rather seems rational to see reading even below 0% in the Q1 with the lowest point in the late Q2 of 2023
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As the US GDP release is almost here, we asked Dominik Podlaski (Bitget) to share his view on tomorrow's print - would we see a near 3% growth for the third time in a row?
Until the FED has the inflation under control, it is expected to keep raising interest rates
Dominik Podlaski (Analyst at Bitget): According to the top world economic analytics it is highly improbable US GDP will see such a reading for Q1 2023. It rather seems rational to see reading even below 0% in the Q1 with the lowest point in the late Q2 of 2023. The bounce we’ve seen in the second half of 2022 didn’t change the hawkish attitude of the FED and their plans for monetary policy tightening. FED statements and global economy forecasts suggest further decrease of US GDP in the first half of 2023.
Despite interest rates being highest since June 2006 the inflation is still way too high over the desired level. Until the FED has the inflation under control, it is expected to keep raising interest rates. Therefore, there are forecasts of them reaching levels around 5.25% in 2023, which means the first half of the 2023 won’t bring relief to the markets.
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In summary the effects of the inflation are already seen all over the world, but to have the markets flourish again we have to wait for the monetary tightening policy to have the effect. Until then both GDP and stocks will be under heavy pressure.
Sources:
https://www.kiplinger.com/personal-finance/banking/savings-rates
https://www.conference-board.org/research/us-forecast
