Supply and Demand
by AIB Treasury Economic Research Unit
- Market attention this year has been very much focused on hikes in central bank rates and when they might end.
- Significant rates cuts are still expected in the US in 2024-2025, with rates falling from 5.375% to 3.75%, but they are then expected to settle around this level in subsequent years.
- This hardening of expectations in regard to the level of official rates over the longer term has pushed up bond yields in the past month.
- The primary driver of the higher-for-longer rate outlook is the diminishing risk of recession and growing expectations of a soft landing for the world economy
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