The Fed gives in to the clamour for looser money
Its doveish policymaking looks premature—and leaves Europe’s central banks in an awkward spot
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.
This article appeared in the Leaders section of the print edition under the headline “The Powell pivot”
Leaders December 16th 2023
- Rishi Sunak’s strategic genius
- Can you have a healthy democracy without a common set of facts?
- Iran’s regime is weaker than it looks, and therefore more pliable
- The Fed gives in to the clamour for looser money
- London’s resilience is a lesson to policymakers everywhere
- In a first, COP28 targets the root cause of climate change
From the December 16th 2023 edition
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