Wall Street may be eager for interest rates to fall, but the messaging from Federal Reserve officials is consistent. “We don’t have to rush,” Fed Chairman Jerome Powell reiterated on Friday. He spoke just after the central bank's preferred indicator of underlying inflation showed prices continuing to cool (0.3% in February) while still remaining high enough to keep Powell sticking to his favorite strategy: caution. “The fact that the U.S. economy is growing so robustly, the fact that the job market is still very, very strong, gives us a chance to be a little more confident that inflation is coming down before we take the important step.” Rate cuts,” Powell said. In fact, the latest numbers reassure strategists that the American economy is holding up well after a two-year campaign of interest rate hikes. Inflation-adjusted consumer spending topped estimates after the biggest wage increase in more than a year, according to the Bureau of Economic Analysis report. “Central bankers can afford to wait to cut interest rates,” writes Jonathan Levin in Bloomberg Opinion.
When it comes to stocks, traders this week continued to ignore warnings of a growing artificial intelligence-fueled tech bubble that could burst at any time. Stock prices continued to rise this week, hitting a record high in the closing stages of a quarter that saw the market rise more than 10%. “The S&P 500 continues to defy all critics,” said Chris Zaccarelli of the Independent Advisor Alliance. “Investors are more impressed by the state of the economy and resilient consumers than by concerns that the Fed's rate cuts will be pushed further into the future.”
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