According to the Wall Street Journal, a paper written by two economists from the Federal Reserve Bank of Kansas City has attracted market attention. The article indicates that U.S. interest rates may remain above 5% for much longer than investors expect, perhaps until 2026. Year.
While the Federal Reserve has tightened policy over the past year at perhaps the fastest pace since the 1980s, rapidly rising inflation is pushing equilibrium interest rates in the U.S. economy up even faster, these economists said. With economic growth still so strong (U.S. GDP grew at an annualized rate of 2% in the first quarter, according to the latest estimates), the Fed may need to keep interest rates no lower than current levels for more than three years to achieve the inflation rate the Fed cares about. The benchmark PCE index returned to the central bank's 2% target.