The Federal Reserve will probably hold the main interest rate at the highest level in 23 years before making two quarter-point reductions in borrowing costs during the fourth quarter, Conference Board Principal Economist Erik Lundh said Wednesday, May 8.
Stubborn increases in prices for shelter, energy and insurance premiums stoked inflation during the first quarter, Lundh said, forecasting that the central bank is unlikely to restore inflation to 2% before Q2 2025. The Conference Board previously predicted that the Fed would make the first rate cut in June.
Consumer spending is likely to slow in coming months, Lundh said, which would ease price pressures. Households will likely reduce outlays as income growth slows, savings declines and debt rises, he added. Read more.