From The Editor

Has the Peak Been Reached on Interest Rates?

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MCN Editor Dan Markham The past 18 months produced an environment today’s younger business executives might have heard about, but never experienced – a period of rapidly rising interest rates.

From March 2022 to July 2023, the Federal Reserve announced 11 rate hikes in an effort to tame runaway inflation, a related problem that hadn’t been seen for decades. The hikes took interest rates from near zero to the 5.25-5.50 range at the end of 2023.

The question now is, was this the peak? Recent comments from Federal Reserve Chair Jay Powell seems to suggest that, Ryerson’s Nick Webb told attendees at the AWMI Chicago’s Annual Economic Outlook meeting last week. Webb is Ryerson’s director risk management.

Through year’s end, Powell was still uncertain about the need for another hike, but his tune changed in his most recent remarks, Webb said. “Between Dec. 1 and Dec. 15, Powell said, at first, ‘we hadn’t done enough.'" Webb related. "Two weeks later, he said, ‘we think we’ve done enough. It looks like we’re on the right trajectory.’"

Powell’s job is certainly challenging. With inflation abating, he would like to bring interest rates back down, but not so far down as to incite a recession.

“It’s a very difficult test. To cool down the economy, but not so much to cause too many job losses. You want wages to come down, but not too much. It’s a pretty tricky thing,” Webb said.

So what will the fed boss do? Webb expects the Federal Reserve will ultimately announce cuts that will bring the rate down 75 to 100 basis points by the end of 2024.