‘Year of the landing’: Bank of America’s outlook for 2024

Bank of America economists and strategists forecast that disinflation will continue, while central banks will begin cutting rates midway through 2024

Uncertainty became the buzzword of the pandemic and has continued to be bandied around amid the global geopolitical instability of the past two years. 

But the recession widely expected in 2023 failed to materialise and, in many geographies, inflation rates peaked towards the back-end of 2022 and have continued to decline throughout this year. 

Now, in their newly-released outlook for 2024, Bank of America (BofA) Global Research economists and strategists forecast that this disinflation will continue, while both the Federal Reserve and European Central Bank will begin cutting rates midway through the year. 

Rate hikes seen over the past 18 months are anticipated to ultimately weaken growth and lead to higher levels of unemployment, though economists are calling for a soft landing as opposed to a recession. 

Reflecting on a year of turbulence, Candace Browning, Head of BofA Global Research, comments: “2023 defied almost everyone's expectations: recessions that never came; rate cuts that didn't materialise; bond markets that didn't bounce, except in short-lived, vicious spurts; and rising equities that pained most investors who remained cautiously underweight.

“We expect 2024 to be the year when central banks can successfully orchestrate a soft landing, though recognise that downside risks may outnumber the upside ones.”

What are Bank of America researchers predicting?

Among BofA’s key calls for 2024 relating to markets and the economy is a global shift to rate cuts. 

Claudio Irigoyen, Head of Global Economics at BofA, expects inflation to gradually decrease across the globe, allowing many central banks to cut rates in the second half of 2024 and avoid a global recession. 

Chief US Economist, Michael Gapen, expects the first Federal Reserve rate cut in June and the European Central Bank to cut 25 basis points per quarter in 2024.

The New York Stock Exchange

Meanwhile, Chief Investment Strategist Michael Hartnett believes the bull markets of 2024 will be bonds, bullion and market breadth. His take is that the risk of a hard landing for the economy is higher than expected, and he awaits with bated breath the combination of bearish investor positioning, recessionary corporate profits and policy easing.

Other forecasts include:

  • S&P 500 to end 2024 at 5,000 – an all-time high
  • Japan: An improvement in consumer spending and inflation to remain above consensus, a positive in the case of Japan. Strategists expect progress with corporate reform, evidenced by the highest number of companies raising guidance in ten years.
  • The impact of fiscal investment programs should dissipate. BofA’s US economists expect consumption to slow down, but not to crash. 
  • Policy uncertainty could rise as elections occur in countries making up more than 60% of global GDP. BofA’s research team expects heightened policy uncertainty amid increasing political polarisation. Fiscal consolidation will become difficult, impacting rates.

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