The US Federal Reserve is expected to delay interest rate cuts until late 2026, as inflation remains elevated due to rising energy prices linked to global conflict
The delay is driven by structural inflation pressures:
- Energy price surge from Middle East conflict
- Persistent inflation above Fed’s 2% target
- Strong labour market reducing urgency for stimulus
- Policy uncertainty under new Fed leadership
Financial Market Impact:
- Investors reduce expectations for rate cuts
- Bond yields remain elevated
- Equity markets face mixed reactions
Business Impact:
- Higher borrowing costs for companies
- Slower expansion and investment decisions
- Increased financial pressure on debt-heavy firms
Macroeconomic Effect:
- Tight monetary policy continues globally
- Risk of slower economic growth
- Inflation becomes more persistent
