The Fed's Conundrum: Interest Rates Are Both Too High-and Too Low

The Fed's Conundrum: Interest Rates Are Both Too High-and Too Low By Hardika Singh

Short-term interest rates are sharply higher. Long-term rates are steadier. What's a central bank to do? Meanwhile, the median existing-home price rose 5.7% from a year earlier, and Switzerland's central bank is one of the first rich countries to cut interest rates. Read on for this news and more.

Top News The Fed's Conundrum: Interest Rates Are Both Too High-and Too Low

The Federal Reserve is still aiming to lower interest rates later this year, and for many U.S. households and small businesses those rate cuts can't come soon enough. But for big companies able to tap the corporate bond market, and for investors riding a rising stock market, relief from the Fed doesn't seem all that necessary.

Hannon's Take The Swiss Aside, Central Bankers Have Yet To Declare Victory

It is increasingly clear that central banks in rich countries expect to lower their key interest rates over coming months. But only one has declared victory in the battle to tame inflation. Switzerland's central bank surprised investors when it lowered its key rate by a quarter of a percentage point Thursday.

U.S. Economy U.S. Home Sales Jumped 9.5% in February

Home sales rose in February from the month prior , marking the first time in more than two years that sales increased for two consecutive months. Sales of existing homes, the majority of purchases, surged 9.5% to a seasonally adjusted annual rate of 4.38 million, the National Association of Realtors said Thursday.

Financial Regulation Roundup U.S. Sues Apple, Alleges Tech Giant Exploits Illegal Monopoly

The Justice Department and 17 states sued Apple on Thursday, alleging the tech giant blocked software developers and mobile gaming companies from offering better options on the iPhone, resulting in higher prices for consumers.

Forward Guidance Friday (all times ET)

12 p.m.: Fed's Barr speaks at Transnational Law Conference on the International Law of Money

1 p.m.: ECB's Lane speaks at Aix-Marseille School of Economics

4 p.m.: Atlanta Fed's Bostic speaks at Household Finance Conference

Monday

8:25 a.m.: Atlanta Fed's Bostic speaks at University of Cincinnati Real Estate Center's March Roundtable

10 a.m.: U.S. new home sales

10:30 a.m.: Dallas Fed Texas Manufacturing Outlook Survey

Research Elevated U.K. Services Inflation, Wage Growth Could Delay BOE Rate Cut

The Bank of England could delay cutting interest rates until August if U.K. services inflation and wage growth stay higher than expected, Berenberg senior economist Kallum Pickering says in a note. "Although policymakers expect inflation to hit the 2% target over the coming months, they remain concerned about sticky services inflation as well as elevated wage growth - such worries may persist as the economic recovery strengthens and labor markets remain tight," he says. Berenberg expects a first rate cut in June. Markets fully price in a rate cut in August, with a significant possibility of an earlier move in June, Refinitiv data show. - Miriam Mukuru

Basis Points The Bank of Canada is for now sticking to its original timetable to reduce excess reserves from its balance sheet, with a plan to resume purchasing-starting next year-government securities with a focus on adding shorter-term debt, a senior central-bank official said Thursday. - Paul Vieira The Bank of Mexico cut its benchmark interest rate Thursday in a split decision, kicking off what is expected to be a gradual and cautious easing cycle while inflation remains above its 3% target. - Anthony Harrup Across the U.S., business decisions once made in boardrooms or shareholder meetings increasingly depend on politics. The U.S. isn't sliding toward socialism, in which the government controls the means of production. It may, however, be slouching toward state capitalism, in which government regularly intervenes in business to ensure it serves the national interest. - Greg Ip Australia's highly-indebted households appear well-placed to continue riding out the pain of high interest rates and soaring living costs, with even the most vulnerable in a position to continue servicing mortgages, the Reserve Bank of Australia said Friday. - James Glynn Japan's consumer inflation picked up in February as food prices continued to rise and effects of the government's support for energy bills tapered off. Overall consumer prices rose 2.8% from a year earlier in February, compared with the 2.2% increase in January, government data showed Friday. - Megumi Fujikawa Feedback Loop

This newsletter is compiled by Hardika Singh in New York.

Send us your tips, suggestions and feedback. Write to:

[hardika.singh@wsj.com]

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

March 22, 2024 07:16 ET (11:16 GMT)

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