US stocks rallied to records after the Federal Reserve indicated it’s likely to deliver the cuts to interest rates this year that Wall Street craves, despite some discouragingly high inflation reports.
Some of Wall Street’s nervousness coming into the day washed away after the Fed released a survey of its policy makers, which showed the median still expects the central bank to deliver three cuts to interest rates in 2024. That’s the same number as they had penciled in three months earlier, and expectations for the relief that such cuts would provide are a big reason US stock prices have set records.
The Fed has dangerously little room for error. Cutting rates too early risks allowing inflation to reaccelerate, but cutting too late could lead to widespread job losses and recession.“I don’t think we really know whether this is a bump on the road or something more; we’ll have to find out,” Powell said about January and February’s inflation data.
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