Economic Update December 2024

In 2024, inflation finally abated across most jurisdictions with a lower-than-expected cost in terms of growth and unemployment. Given this resilience at the start of the central bank easing phase, a key question for investors in 2025 will be how far will rates be cut to balance growth needs and inflation caution in a time of geopolitical uncertainty?

As 2024 draws to a close, macroeconomic conditions have finally allowed most major central banks to begin easing. The rapid and synchronous increase in interest rates, and their brief pause in contractionary territory, was largely effective in lowering inflation - an unsurprising result. What has been more surprising has been that this has not tipped the global economy into recession, with growth momentum impeded rather than stopped. Consequently, labour market gains have been, for the most part, preserved and this has been key in allowing the consumer to cope with a permanently higher cost of living.