The Federal Reserve is likely to start cutting interest rates midyear but the easing cycle will be more gradual in the United States than in other developed markets, U.S. bond giant PIMCO said on Wednesday.
PIMCO favors bond markets in countries such as Australia, Canada and the United Kingdom because inflation risks are less pronounced there than in the U.S., Tiffany Wilding, an economist, and Andrew Balls, chief investment officer for global fixed income, wrote in a 6-12 month outlook report.
“Central banks, which tightened policy in unison to curb the pandemic inflationary spike, will likely follow varied paths when cutting interest rates,” they said. “While many large, developed market economies are slowing, the U.S. has maintained its surprisingly strong momentum, with several supportive factors poised to persist.”
Such factors include larger pandemic-related stimulus measures, elevated fiscal deficits, and the artificial…
