US Fed’s embrace of three rate cuts opens door to lower borrowing cost, stronger currency in S’pore

The US Federal Reserve said on March 20 that it will leave the benchmark rate in a range of 5.25 per cent to 5.5 per cent.

In a nod to sticky inflation, the Fed did revise its median estimate for 2024 inflation up to 2.6 per cent from 2.5 per cent; still, the central bank kept the path to three rate cuts for the year unchanged. Dr Chua Hak Bin, regional co-head of macro research at Maybank, said Fed projections showed the three rate cuts would shave off a cumulative 0.75 percentage points from the benchmark rate by the end of 2024, which will translate to around a 50-basis point fall in Singapore’s short-term rates.

Mr Sim Moh Siong, currency strategist at Bank of Singapore, expects an even stronger Singdollar, with his six-month forecast at $1.32 and $1.29 after 12 months. Mr Siong said: “We expect the US dollar to weaken later this year, but in a moderate fashion. The US will still have the interest rate advantage; US rates will still be one of the highest, relative to other major countries as well as to Asian countries as well.”

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Asian stocks jump as US sticks to rate cut planSINGAPORE : Asian shares bounced while gold prices and Japan's Nikkei jumped to record highs on Thursday after the U.S. Federal Reserve indicated it would stick with plans for cutting interest rates.The U.S. dollar nudged lower and traders slightly increased their expectations for a U.S. rate cut in June.
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