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A flurry of Fed rate cuts may not happen: Inflation is down but not dead
Expectations of a prolonged interest rate-cut cycle need to be tempered given the presence of several inflationary risk factors.
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Expectations of a prolonged interest rate-cut cycle need to be tempered given the presence of several inflationary risk factors.
PHOTO: REUTERS
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Come Sept 18, we will most likely see the first cut in the US Federal Reserve’s Fed funds rate since the Covid-19 pandemic in March 2020. Starting in March 2022, the Fed raised its benchmark Fed funds rate 11 times, from near zero to 5.33 per cent.
At the annual central bankers’ jamboree in Jackson Hole on Aug 23, Fed chairman Jerome Powell sounded the clearest possible signal that rate cuts were imminent. “The time has come for policy to adjust,” he said, adding that “the upside risks to inflation have diminished, and the downside risks to employment have increased”.
