America’s interest rates are unlikely to fall this year

Formost of the year everyone from stockpickers and homebuyers to President Joe Biden has banked on the Federal Reserve cutting interest rates soon. Over the past two weeks those hopes have been dashed. Annual consumer price inflation in March, at 3.5%, was higher than expected for the third month in a row; retail sales grew by a boomy 0.7% on the previous month. On April 16th Jerome Powell, the Fed’s chairman, warned that the battle against inflation was taking “longer than expected”. Investors had begun 2024 pricing in more than 1.5 percentage points of interest-rate cuts over the course of the year. Today they expect by only 0.5 points.Mr Powell has conducted a pivot upon a pivot. The euphoric expectations for rate cuts took on a life of their own after the Fed . That unduly stimulated the economy and will force the central bank to retrace its steps, and then some. The consequences of higher-for-longer interest rates will reverberate around America, financial markets and the world economy.