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Feel sorry for rainforests. Analysts are churning out their 2024 Outlook tomes. Most will be useless by the time they hit the reality of trading in January, but they do give us a clear sense of the consensus view for 2024. Focusing on growth, inflation, and policy rates, here is what consensus expects:
- In terms of growth momentum, the US is expected to see the largest growth slowdown – from 2.3% in 2023 to 1% in 2024. Sweden and Germany are expected to see the biggest increases in growth momentum (Chart 1).
- On inflation, almost every DM country is expected to see inflation fall to 3% or lower in 2024 (Chart 2).
- Sweden and the UK are expected to see the largest drop in inflation. For the UK – inflation is expected to drop from +7.4% in 2023 to +3.1% in 2024. Meanwhile, the US is expected to see inflation fall just 1.5pp (Chart 3).
- On policy rates, the Fed and BoC are expected to cut rates the most – roughly 100bps in 2024. Meanwhile, the BoJ is expected to hike (Chart 4).
Given the above, the 5 big views are:
- Inflation will fall everywhere.
- The Fed will be forced to cut the most as the US suffers the biggest drops in growth with inflation back at target.
- Japan will see slower growth, but an extended period of above target inflation will force the BoJ to hike.
- The Euro-area and UK will see similar growth in 2024 as in 2023.
- Improving growth outturns will prove unable to stop the Riksbank cutting rates.
Some of these will surely be wrong.
Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.