At the start of 2024, the outlook for the U.S. economy was optimistic. Inflation was falling, unemployment was shrinking and the country was experiencing strong GDP growth. As 2024 progressed, that situation changed. Inflation proved stubborn, remaining above 3%, and economic output slowed down, making the Federal Reserve’s initial prediction for six rate cuts no longer accurate.
Straight Arrow News contributor Peter Zeihan does not foresee any interest rate cuts in the distant future but believes rates will instead move in the opposite direction.Â
Excerpted from Peter’s May 10 “Zeihan on Geopolitics” newsletter:
Who doesn’t love spending their morning trying to understand what the Federal Reserve is doing? Oh, no takers? Well, let’s at least look at inflation trends and where I expect interest rates to go.
Thanks to COVID-related supply chain disruptions, inflation has stabilized around 3% (instead of the Fed’s magic 2%). Those baby boomers are also part of the problem. As they age into retirement, capital availability is going to decline and the Fed’s going to have [to] rethink their strategy.
I doubt we’ll see interest rates drop for the next few years, so if you’re planning on borrowing some money… you might want to get on that ASAP.