America’s interest rates are unlikely to fall this year
That will squeeze financial markets and the world economy
For most of the year everyone from stockpickers and homebuyers to President Joe Biden has banked on the Federal Reserve cutting interest rates soon. Over the past two weeks those hopes have been dashed. Annual consumer price inflation in March, at 3.5%, was higher than expected for the third month in a row; retail sales grew by a boomy 0.7% on the previous month. On April 16th Jerome Powell, the Fed’s chairman, warned that the battle against inflation was taking “longer than expected”. Investors had begun 2024 pricing in more than 1.5 percentage points of interest-rate cuts over the course of the year. Today they expect rates to fall by only 0.5 points.
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This article appeared in the Leaders section of the print edition under the headline “The second Powell pivot”
Leaders April 20th 2024
From the April 20th 2024 edition
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