Inflation Fears Bloom for the Fed’s Rite of Spring
Overheating in the economy is now seen as a bigger risk than recession in yet one more strike against rate cuts.
The US economy feels like its blossoms will never fall.
Photographer: Andrew Harrer/Bloomberg
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Not long ago, money markets were priced on the assumption that a rate cut from the Federal Reserve this month was a total certainty. Now, as the Federal Open Market Committee convenes for its spring meeting while Washington’s cherries come into blossom, that’s changed. Nobody thinks that rates are going down yet, while money managers are back to thinking that the greater risk is overheating — which would imply a risk of more inflation and greater interest rates to keep them in check.