The Fed gives in to the clamour for looser money

For most of 2023 big central banks have shrugged off investors’ bets that interest-rate cuts were imminent. That all changed on December 13th, when the Federal Reserve signalled that it expected to cut rates by three-quarters of a percentage point in 2024, coming close to endorsing markets’ doveish views and causing a frenzy of buying on a delighted Wall Street. At the start of the month Jerome Powell, the Fed’s chairman, had said that it was premature to discuss the timing of rate cuts. Now he says loosening is under discussion for the first time since inflation surged after the covid-19 pandemic.