On May 2, the US Fed kept its key lending rates at 5.25%–5.50% after the inflation numbers for March crept up to 2.7% — instead of dipping, as expected. The latest data-set has left analysts and economists speculating on a new timeline for the slashing of interest rates — after the US presidential election in November.
The US Federal Reserve’s decision to keep interest rates higher for longer, rather than raising or cutting rates, indicates that economic conditions have been holding up “quite strong”, as seen from recent economic data, says Yeap Jun Rong of IG Asia, the Singapore unit of IG Group.
The market strategist says that while a rate cut is the ideal situation many are looking forward to, it might mean some economic cracks. “So it’s not necessarily a bad thing to have higher-for-longer rates,” he adds.
