U.S. Benchmark Interest Rate: Projections, Challenges, and Economic Indicators

The U.S. benchmark interest rate is expected to decrease to around 4% from the current 5.5%, despite potential challenges and a delayed rate hike.

### The Future of the U.S. Benchmark Interest Rate and Economic Outlook
* 📉 It is highly likely that the U.S. benchmark interest rate will **fall smoothly to around 4%** from the current 5.5% by next year, with a **potential for more substantial cuts**.
* 🏦 Historically, interest rates should have been **lowered last year**, and once the rate cut cycle begins, there is a **high probability of a sharp decline**.
* 🌐 The neutral interest rate has been declining over time, and based on the difference between the current rate and the neutral rate, the **5.5% benchmark rate is relatively high** from a historical perspective.
* 🤖 Despite the positive impact of AI on productivity, the benefits are not evenly distributed, and there are concerns about **further polarization in the market**.
* 🏠 Housing costs in the U.S. are a significant driver of inflation, and despite high mortgage rates, prices continue to rise due to **unique factors such as the high resistance of housing costs in the CPI**.
* 🚗 An important turning point in May's CPI was the **20% increase in U.S. car insurance premiums**, driven by the **sharp rise in car prices**.
* 🌞 According to a 5.5-year cycle theory, inflation peaks when the sun is at its most active, and as the sunspot cycle is currently at its peak, **inflation is expected to continue falling for the next 11 years**.

### Global Economic Outlook: U.S. Debt Crisis, Japan's Monetary Policy, and Bank of Korea's Interest Rate Cut
* 🇺🇸 The U.S. is facing a severe debt crisis, with the national debt expected to reach **$50 trillion in the next 10 years**. The interest burden on the U.S. government is projected to surge to **$1.6 trillion by the end of this year**, reaching a historical high of **5.3% of GDP**.
* 🇯🇵 Japan, with a government debt-to-GDP ratio of **over 250%**, is also grappling with its own challenges. The Bank of Japan is expected to **raise interest rates and implement quantitative tightening** in the near future.
* 🇰🇷 The Bank of Korea is forecasted to cut interest rates starting from October, with the neutral interest rate estimated to be in the **late 1% range**. The current benchmark interest rate of 3.5% is expected to decline to around **2.75% by the first half of next year**. The August inflation data, which will be most significantly reflected in early September, is a **key factor to watch**.
* 📉 The U.S. economy experienced two consecutive quarters of **negative growth** in the first half of 2022, leading to concerns of a **technical recession**. The growth outlook for this year is relatively conservative, with the GDP expected to grow by around **2.6%**.
* 🏛 The Biden administration aims to balance the U.S. budget by 2029 **within 3% of total GDP**. However, the increasing debt burden is a major challenge, and it won't be easy to apply fiscal brakes this year, especially with the upcoming presidential election.
* 📊 The accuracy of U.S. employment indicators is a topic of debate, with concerns about **exaggerated parts** and the **declining response rate to surveys**. The monthly employment data, which has been showing positive trends, is considered **less accurate** than the **complete survey data** that comes out later.
* 🌐 When considering the global economic outlook, it's important to observe the trends in major economies such as the **U.S., Japan, and Korea**. The interconnected nature of the global economy means that **developments in one country can have significant implications for others**.

여러분이 미 연준 의장이면 금리인하 '어떻게' 하겠습니까. (문홍철 팀장, 윤여삼 파트장) | 인포맥스라이브 240620

깊이와 수준이 다른 경제금융미디어 연합인포맥스가 만드는  채널

한 순간도 멈추지 않는 실시간 금융정보와 뉴스!
뉴스, 외환, 채권, 주식, 기업정보, 리얼타임 차트 등
인포맥스 금융단말기에서 유료로 제공되는 콘텐츠를
경제채널과 유튜브에서 무료로 제공하고 있습니다!

📢연합뉴스경제TV 채널번호 안내
KT지니TV - 187번
Btv - 167번
LGU+ - 171번
Btv알뜰 - 199번
HCN  - 417번
딜라이브 - 268번

저작권자(c) 연합뉴스경제TV, 무단 전재-재배포, AI 학습 및 활용 금지


연합뉴스경제TV

benchmark interest rate is expected to smoothly decrease to around 4% from the current 5.

5% by next year, with a high possibility of breaking the 4% barrier.

The rate cut cycle, driven by the need for a more substantial decrease, may result in the interest rate eventually reaching zero.

The decision-making process is influenced by various factors, including inflation indicators, oil prices, and policy expectations.

The Impact of Economic Data on FOMC Meeting Discussions

The US 10-year inflation rate coming out lower than expected led to questions about inflation at the FOMC meeting.

The market's expectation of future interest rates was influenced by discussions of possible rate cuts, with a projected decrease to around 3-4% followed by a moderate increase.

Lowering the benchmark interest rate was linked to taking out insurance against the risk of a future economic slowdown, despite historical patterns showing it occurring before a recession.

Predicting the Future of Interest Rates in the U.

A financial expert discusses the high probability of a sharp decline in interest rates, possibly once or twice within the year.

benchmark interest rate is relatively high from a historical perspective, leading to concerns about a major economic crisis.

The decreasing neutral interest rate is aligning with growth and inflation levels, indicating a need for careful consideration when setting the interest rate.

Potential Impact of AI and Interest Rates on the US Economy

The US is expected to experience a 2% real income growth with the stabilization of inflation, allowing for a potential decrease in the benchmark interest rate to below 4% by next year.

The tight labor market and increasing productivity due to AI development may lead to a decrease in the power to hire people and a reduction in wage income elasticity.

The top-performing companies in the US stock market, particularly the top 7, are facing significant growth, leading to polarization within the market, while the remaining companies are struggling to keep up.

The Impact of Economic Cycles on Inflation and Housing Costs in the US

The 11-year sunspot cycle is currently influencing inflation, which is expected to decrease over the next 11 years.

Housing costs in the US are rising despite high interest rates, leading to a historic low in existing home sales volume.

Car insurance premiums in the US have significantly increased, but are now expected to decrease after reaching their peak, impacting service prices and the overall CPI.

Economic Indicators and Employment Trends in the United States

- The unemployment rate in the United States has risen from 3% to 4%, indicating a small but significant change, which could impact consumer spending and economic growth.

- There is a discrepancy in the employment data, with monthly observations showing positive increases, but complete surveys painting a less optimistic picture, leading to confusion and uncertainty.

- The nature of startups and the changing structure of businesses post-pandemic are raising questions about the accuracy of non-agricultural employment numbers, which may need revision in the future.

Powell and Williams Highlight Flaws in US Employment Indicators

Fed Chairman Powell and New York Fed President Williams point out flaws in US employment indicators, suggesting exaggerated and inaccurate data.

The survey response rate is dropping significantly, leading to controversy about the accuracy of the non-farm payroll numbers.

The US economy is facing a worsening economic situation, with a growing deficit and increasing interest burden on the government, potentially leading to a historical high in debt.

Presidential Election on Fiscal Policy and Government Debt

The benchmark interest rate during the 1980 oil shock was 20%, with the government debt at about 40% of GDP.

The Biden administration aims to balance the U.

budget by 2029 within 3% of the total GDP, offering a more balanced fiscal policy than the Trump administration.

There are concerns about the increasing U.

government debt, leading to a debate about the trust in the dollar and U.

Japan is also facing challenges with its monetary policy and government debt, considering a possible move towards austerity.

The Divergent Economic Landscapes of Japan and the United States

The United States is a net debtor with over $10 trillion of its $28 trillion national debt being held by foreigners, leading to low credibility.

On the other hand, Japan is a net creditor with over $2 trillion in assets exceeding its liabilities globally, and despite a government debt of 250% of GDP, it manages its debt without feeling a crisis.

Japan's monetary policy may involve raising interest rates, while the exchange rate and import prices are key considerations in managing the debt.

Potential Interest Rate Adjustments by the Bank of Korea

The Bank of Korea is likely to cut interest rates starting from October, following the potential rate cut by the U.

The interest rate could potentially decrease to 2.

75% in the first half of next year, with a possibility of action as early as August.

There is a consideration of acting faster than the Federal Reserve based on historical patterns.