Poll respondents also raise their outlook for inflation
The Federal Reserve building in Washington. The Federal Reserve will lower interest rates just once this year, according to a new poll of academic economists, as lingering inflation forces the US central bank to adjust its schedule to cut borrowing costs.
Expectations that rates will remain higher for longer follow months of stickier-than-expected inflation. The US Bureau of Labor Statistics will publish its consumer price index data for May on Wednesday, just hours before the Fed’s rate announcement.‘I remember what it was like to count my pennies.
Fed officials believe the continued strength of the jobs market gives them leeway to keep rates at a 23-year high of 5.25-5.5 per cent, unlike central banks in the Eurozone and Canada, which both cut rates last week. Julie Smith, a professor at Lafayette College, said a September move was likely “and maybe another one later in the year after the US election”.
Claudia Sahm, a former Fed staffer who is now chief economist at investment manager New Century Advisors, said a disappointing CPI figure for May could lead officials to switch from three to one.
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