SVB – Economic Report, Q1 2024

The Federal Open Market Committee (FOMC) has shifted to a more dovish outlook, indicating a potential decrease in interest rates in 2024. Inflation has been on the decline, with core personal consumption expenditures (PCE) showing a decrease from the previous year. Despite economic uncertainty, credit metrics remain solid, particularly in the industrial corporate sector. Global central bank rates are expected to decrease in 2024, potentially narrowing the rate advantage of the USD over foreign currencies. The bond market experienced volatility in 2023 but saw improved performance in the fourth quarter as expectations for a soft landing and an end to Fed tightening grew. GDP growth slowed in 2023, with personal consumption and domestic investment being major contributors. Federal Reserve Chairman Jerome Powell indicated that the FOMC is likely done raising rates and may consider lowering them in the near future. Major equity market indices saw robust gains as investors anticipated a shift in Fed policy towards rate cuts to combat inflation.