3 trends that are going to keep Federal Reserve interest rates higher for longer

Torsten Slok is chief economist at Apollo Global Management:

  • “Payrolls up 303k, household survey up 498k, unemployment rate down, wage growth still high… The source of this strength is easy financial conditions… We are sticking to our view that the Fed will not cut interest rates this year”
  • “If the data is too strong, then why are we cutting?”
  • “I think the Fed will not cut rates this year. Higher (rates) for longer is the answer.”

Among other reasons for growth, inflation and interest rates to stay higher than in the past two decades.

  • a more productive economy
  • larger government budget deficits
  • the return of some manufacturing to the United States from overseas

I’ve been posting a lot on my view of higher for longer, for example:

But I really should point out that not everyone agrees. Mester and Daly made the case for a June, and furterrh, rate cuts last week:


This article was written by Eamonn Sheridan at www.forexlive.com. Source