America Isn’t Done With Inflation Just Yet

It’s a crucial week ahead for central banks that oversee 40% of the world’s gross domestic product. There’s intense speculation that the Bank of Japan will raise interest rates for the first time since 2007, ending the world’s last negative rate. In the US, policymakers are expected to hold steady until it’s clear that price surges are contained, as the glide path to a soft landing experiences some turbulence. Moreover, a slight uptick in inflation revealed by data this week may mean the Federal Reserve will stick with its mantra of patience longer than previously expected. Economists surveyed by Bloomberg now forecast three US interest-rate cuts this year and four in 2025. The UK and euro-zone also look set to begin cutting rates later in 2024 as inflation there comes under control.

But while the US economy has avoided a recession and unemployment has remained low, that doesn’t mean everyone is having an easy time of it. Some Americans feel increasingly pressured by the surge in the cost of carrying their debt. Delinquency rates on their credit card debt and auto loans are now at the highest in more than a decade. Of course there’s a flip side: Many US families are relatively well-positioned to service their debt, and broad wage gains mean workers are pulling in larger paychecks.