Are rates high enough? Fed resets clock on interest-rate cuts

A string of disappointing inflation data has forced the Federal Reserve to reset the clock on its first interest-rate cut and re-evaluate the trajectory of price growth.

Most policymakers have made clear they expect interest rates are at their peak, but some Fed officials have expressed an openness to the idea should it be necessary to tame price growth. Economists now expect two cuts this year, down from three forecast in March, according to the median estimate in a Bloomberg survey.

“If you don’t know how restrictive you are, you almost have to wait to see it,” said Sarah House, senior economist at Wells Fargo & Co. “Uncertainty around how restrictive policy is likely draws out the timeline of the current policy setting.” ADVERTISEMENT CONTINUE READING BELOW Financial conditions Financial conditions have also played a role. When Fed officials started talking more about cuts at the end of last year, markets rallied.

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