Kroll Bond Rating Agency representatives predicted significant cuts in the Federal Funds Rate this year, in line with other analysts.

The prediction came during the Bermuda Risk Summit Thursday at Hamilton Princess & Beach Club.

Overseas, Kristina Hooper, chief global market strategist at Invesco, believes the US Federal Reserve’s Federal Open Market Committee could start cutting interest rates by the end of the second quarter.

The effects of the pandemic forced the Fed to raise borrowing costs for consumers and businesses to rein in high inflation. It meant higher rates for mortgages, credit cards, car loans and other forms of lending.

But Fed chair Jerome Powell said last week that they could be close to backing off their restrictive monetary policy.

The FOMC has raised interest rates 11 times in a year and a half, resulting in a key federal funds rate of 5.25-5.5 per cent, the highest in two decades.

KBRA sees a post-pandemic world in which the United States will experience a soft landing with business growth and stable markets superior to other countries.

“Financial markets will hold up relatively well,” said KBRA chief strategist Van Hesser during the rating agency’s networking lunch at the summit.

Speaking with KBRA senior adviser Mark Baker, Mr Hesser thought Europe, Britain, Japan and China would have a harder time.

“They are all, to varying degrees, impacted more by the monetary tightening that we have seen, than the US,” he said. “The United States will outperform them.”

He guessed there would be three Federal interest rate cuts this year.

“At 550 basis points, the Fed Fund’s rates are restricted,” he said. “If you’re the Fed, and you think through this equation, it’s not really just about when and by how much they will cut them, but why.”

He said it would be more unsettling if the Fed did four, five or six cuts in quick succession, than a 25 basis point cut, pausing, then doing another cut.

“Three cuts would add up to 75 basis points of tightening after 525 basis points of hikes,” he said.

His longer term growth estimate for the United States was 1.5 per cent. He also thought the labour market would hold together “reasonably well” at 4.2 per cent.

“That would really be extraordinary, where the 50-year average might be north of 6 per cent,” he said.