Bloomberg Weekend Reading: Federal Reserve Deems Economy Strong Enough to Postpone Rate Cuts


Bloomberg Weekend Reading: Federal Reserve Deems Economy Strong Enough to Postpone Rate Cuts

Recently, Wall Street has been eager for interest rates to start falling. However, US Federal Reserve officials have been delivering consistent messaging indicating that there is no rush to make any changes. Fed Chair Jerome Powell emphasized this point on Friday. He spoke after the central bank’s preferred measure of underlying inflation showed prices continuing to cool in February at 0.3%, but remaining high enough to validate Powell’s cautious approach. Powell highlighted that the strong pace of US economic growth and robust labor market provide the opportunity to wait for inflation to subside before considering a rate cut.

The latest economic indicators are reassuring analysts that the American economy is performing well following a two-year campaign of rate hikes. Inflation-adjusted consumer spending surpassed expectations following a significant increase in wages, according to the Bureau of Economic Analysis. Jonathan Levin of Bloomberg Opinion believes that central bankers can afford to be patient before making any decisions to reduce benchmark interest rates.

Despite warnings of a potential artificial intelligence-fueled tech bubble that could burst at any time, traders have continued to drive stock prices higher this week. Equities reached record highs towards the end of the quarter, reflecting a market surge of over 10%. Chris Zaccarelli of Independent Advisor Alliance noted that the S&P 500 has defied skeptics while investors remain focused on the strength of the economy and resilient consumer rather than concerns about delays in Fed rate cuts.

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