Kiplinger Interest Rates Outlook: Still-Strong Inflation Will Delay Fed Rate Cuts

A stronger-than-expected report on March inflation likely will delay the Fed’s first rate cut.

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The March consumer price index report was stronger than expected, sending interest rates higher, as it implied further delay before the Federal Reserve’s first interest rate cut. The lack of progress on inflation means the Fed will not be cutting interest rates until its July 31 meeting at the earliest. If the coming months’ inflation reports don’t improve, the central bank could push off any rate cuts until its Nov. 7 meeting, after the election. The Fed is probably hoping that it will be able to cut in July, because then it could follow a pattern of cutting at every other meeting, which would avoid a cut at its September 18 meeting, during the height of the presidential campaign.

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David Payne
Staff Economist, The Kiplinger Letter

David is both staff economist and reporter for The Kiplinger Letter, overseeing Kiplinger forecasts for the U.S. and world economies. Previously, he was senior principal economist in the Center for Forecasting and Modeling at IHS/GlobalInsight, and an economist in the Chief Economist's Office of the U.S. Department of Commerce. David has co-written weekly reports on economic conditions since 1992, and has forecasted GDP and its components since 1995, beating the Blue Chip Indicators forecasts two-thirds of the time. David is a Certified Business Economist as recognized by the National Association for Business Economics. He has two master's degrees and is ABD in economics from the University of North Carolina at Chapel Hill.