April 23, 2024

Bloomberg Weekend Reading: Fed Says Economy Strong Enough to Wait on Cuts

Wall Street may be impatient for interest rates to start falling, but the messaging from US Federal Reserve officials has been consistent. “We don’t need to be in a hurry,” Fed Chair Jerome Powell reiterated Friday. He spoke right after the central bank’s preferred gauge of underlying inflation showed prices continuing to cool—0.3% in February—while remaining high enough to keep Powell tied to his favorite strategy: caution. “The fact that the US economy is growing at such a solid pace, the fact that the labor market is still very, very strong, gives us the chance to just be a little more confident about inflation coming down before we take the important step of cutting rates,” Powell said. Indeed, the latest numbers are reassuring strategists that the American economy is holding up just fine after a two-year rate-hiking campaign. Inflation-adjusted consumer spending exceeded all estimates on the heels of the biggest gain in wages in over a year, according to the report from the Bureau of Economic Analysis. “Central bankers can afford to wait before reducing benchmark interest rates,” Jonathan Levin writes in Bloomberg Opinion.

When it comes to stocks, traders this week continued to ignore warnings of a growing artificial intelligence-fueled tech bubble that could pop at any time. Equities kept moving higher this week, hitting a record in the final stretch of a quarter that saw the market surge more than 10%. “The S&P 500 continues to defy all of the naysayers,” said Chris Zaccarelli at Independent Advisor Alliance. “Investors are more impressed with the state of the economy and the resilient consumer than they are worried about Fed rate cuts being pushed of farther into the future.”

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *


Get our latest downloads and information first.
Complete the form below to subscribe to our weekly newsletter.

100% secure your website.