As one of the largest economies in the world, the United States' every move greatly impacts the global economic market, and recently, the Federal Reserve's interest rate cuts have become a hot topic worldwide.
Since the end of last year, due to the rapid decline in US inflation and changes in the economic situation, the topic of interest rate cuts emerged. Initially, the Federal Reserve anticipated three cuts, while Wall Street institutions and analysts generally believed the actual number would far exceed three, possibly doubling to more than seven times.
However, since the start of the new year, the economic situation has shifted again, with no formal progress in the Federal Reserve's interest rate cuts, not even reaching the originally planned three times. The first cut of the year has been delayed, and market expectations for rate cuts have shifted from significantly more than three times to gradually settling back to three, with some even pessimistically predicting none at all.
Comments from several hawkish Federal Reserve officials last week further dampened market expectations for interest rate cuts. On top of this, the U.S. Department of Labor once again published exceptionally high non-farm payroll data, all seemingly indicating that any rate cuts might be delayed and unlikely to reach the initially anticipated three times.
Last Thursday, Federal Reserve “hawk” and President of the Minneapolis Federal Reserve Neel Kashkari stated under the circumstances of such strong performance by the US economy, there is no need for federal intervention. If everything is progressing in a positive direction, why attempt to alter its course artificially?
Federal Reserve Governor Michelle Bowman expressed a more aggressive stance last Friday. She suggested that if US inflation remains above the Federal Reserve's long-term target of 2%, there might be a need for further rate increases this year instead of cuts, a notion that was quite unexpected. Until then, the prevailing market sentiment had been in favor of cuts, with debates focusing on the timing and number of such adjustments, with very few expecting no cuts or even hikes.
