Despite the growing impatience of Wall Street for interest rates to start falling, Federal Reserve officials have remained steadfast in their messaging. Fed Chair Jerome Powell has emphasized that there is no rush to cut rates, especially with the US economy showing strong growth and a robust labor market.
Powell’s caution is tied to the fact that underlying inflation, although cooling, remains high enough to warrant careful consideration before making any changes to interest rates. The latest economic indicators are reassuring strategists that the American economy is in good shape following a two-year period of rate hikes. Consumer spending, adjusted for inflation, exceeded expectations following a significant increase in wages.
This positive data suggests that central bankers can afford to wait before considering rate cuts. Despite warnings of a potential tech bubble fueled by artificial intelligence, traders have continued to push stocks higher this week. The S&P 500 reached a record high in the final stretch of a quarter that saw the market surge by over 10%. Chris Zaccarelli of Independent Advisor Alliance noted that investors are more focused on the strong economy and resilient consumer than concerns about delayed Fed rate cuts. Overall, the market remains bullish and continues to defy expectations.
