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The USxa0economyxa0is so strong that there might not be any rate cuts in 2024

·2 mins

2024 was supposed to be the year consumers could start breathing again. After more than 20 months of inflation and higher borrowing costs, investors, economists, and eventually Federal Reserve officials said they expected the economy to soften this year, allowing the central bank to finally start cutting rates. But those expectations of a Fed pivot keep getting pushed back. While the market initially expected six rate cuts this year, starting in March, that’s now off the table. Now, some economists think the Fed won’t cut interest rates at all this year. The economy is not slowing down, and some underlying measures of inflation are growing. ‘The Fed will not cut rates this year, and rates are going to stay higher for longer,’ one economist said. Richmond Federal Reserve President also echoed the idea that the central bank may not cut interest rates this year. Americans have been struggling with higher prices due to inflation, especially for essentials like rent, groceries, and gas. Food prices rose in recent months, which is a concern for many. In some ways, expectations of interest rate cuts by the Fed undermined their efforts to actually cut the rates. An expanding economy can also accelerate the rate of inflation. Recent data shows that the Fed’s preferred measure of inflation was still stuck above the target. There are other signs that inflation isn’t easing as the Fed had predicted. Small businesses expect to raise prices soon, and prices paid by manufacturing and services companies are also rising. However, a significant number of investors still expect an interest rate cut in the near future. Investors will closely watch for clues about rate cut expectations as the Fed Chair testifies to the House and the Senate next week.