Federal Reserve policy makers appear disinclined to raise interest rates again. But neither do they expect to be cutting rates soon, and when they eventually do, they don’t think they are going to be cutting them by all that much.
This higher-for-longer prospect has been unsettling for investors, and is part of why long-term interest rates have risen so much over the past several months. But if Fed policy makers are right about their ability to keep rates high—and it is a big if—then the economy could be in a very good place.
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