Federal Reserve Economists' Paper: U.S. Rate Cuts May Not Come Until 2026

ChainCatcher news, according to The Wall Street Journal, a paper written by two economists from the Kansas City Federal Reserve Bank has attracted market attention. The article points out that the time the U.S. interest rates remain above 5% may be much longer than investors expect, possibly until 2026.

These economists state that although the Federal Reserve has tightened policy at perhaps the fastest pace since the 1980s over the past year, the rapidly rising inflation is pushing the equilibrium interest rate level in the U.S. economy to rise at a faster rate. Given that economic growth remains so strong (according to the latest estimates, the annualized growth rate of U.S. GDP in the first quarter is 2%), the Federal Reserve may need to keep interest rates at or above the current level for more than three years to bring the inflation indicator PCE index, which the Fed values, back to the central bank's 2% target. (Source link）