Consumers saddled with high\u00a0credit card\u00a0and\u00a0mortgage rates\u00a0held onto a source of solace in recent months: A\u00a0forecast\u00a0from the Federal Reserve promising long-awaited interest rate cuts.<\/p>\n\n\n\n
The economy has refused to cooperate, however, casting that\u00a0financial relief\u00a0into doubt.<\/p>\n\n\n\n
Fresh price data\u00a0released\u00a0on Wednesday marked the third consecutive month of firmer-than-expected inflation; while a blockbuster\u00a0jobs report\u00a0last week revealed that employers are hiring with gusto.<\/p>\n\n\n\n
The hot economy casts doubt over interest rate cuts, likely delaying their widely anticipated start this summer and possibly removing them entirely from the Fed’s calendar this year, some economists told ABC News, while acknowledging that multiple rate cuts remain within the realm of possibility.<\/p>\n\n\n\n
<\/p>\n\n\n\n
The Fed Funds rate remains between 5.25% and 5.5%, matching its highest level since 2001.<\/p>\n\n\n\n
Interest rate cuts would lower borrowing costs for consumers and businesses, potentially triggering a burst of economic activity through greater household spending and company investment.<\/p>\n\n\n\n
But the Fed risks a rebound of inflation if it cuts interest rates too quickly, since stronger consumer demand on top of solid economic activity could lead to an acceleration of price increases.<\/p>\n\n\n\n
At the outset of this year, many economists and traders expected interest rate cuts to begin in June. However, the cautious approach from the Fed has largely nixed expectations of a rate cut in the coming months.<\/p>\n\n\n\n
“At this point, a June rate cut seems to be out of the picture,” Yeva Nersisyan, a professor of economics at Franklin & Marshall College, told ABC News. “The Fed is signaling that it doesn’t want to lower rates.”<\/p>\n\n\n\n
Bret Kenwell, U.S. investment analyst at eToro, agreed. The latest higher-than-expected inflation reading delivered a “blow” to plans for a rate cut in June, he told ABC News in a statement.<\/p>\n\n\n\n
“There’s growing uncertainty about when the first cut of 2024 will come,” he added.<\/p>\n","protected":false},"excerpt":{"rendered":"
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