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Bank of America expects soft economic landing in 2024 despite uncertainty

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November 29, 2023

Bank of America Global Research economists and strategists predict that disinflation will continue into 2024 and expect rate cuts to begin midway through the year from both the Federal Reserve and European Central Bank. Although they expect that last year's rate hikes will weaken growth and cause higher employment, they also anticipate a soft landing rather than a recession, according to a press release.

"2023 defied almost everyone's expectations," Candace Browning, head of Bank of America Global Research, said in the release. "We expect 2024 to be the year when central banks can successfully orchestrate a soft landing, though recognize that downside risks may outnumber the upside ones."

Key macro calls for 2024 include a global shift to rate cuts, with many central banks expected to lower rates in the second half of the year. Bank of America anticipates the first Fed rate cut to occur in June and the central bank to cut rates by 25 basis points per quarter throughout the year.

The U.S. economy may experience a drag from slowing investment spending.

Mark Cabana, strategist for U.S. rates, predicts that the U.S 10-year Treasury yield will remain elevated.

Lastly, the team expects heightened policy uncertainty due to elections taking place in countries that constitute over 60% of global GDP. The anticipated political polarization could impact rates.