Borrowing costs will not drop until late 2027

Consumers and businesses will not see cheaper loans until late 2027. Financial markets have already priced in this shift, reversing expectations held at the start of the year. The Federal Reserve kept its key rate at 3.6% in the March meeting. This decision follows a jump in inflation to 3.4% year-over-year in March, up from 2.4% in February. The surge was driven by rising oil prices tied to the conflict in Iran. Within the Fed, the number of policymakers supporting the possibility of a rate hike has increased from 'several' in January to 'some'. In Federal Reserve terminology, 'some' indicates a larger group than 'several'. Chair Jerome Powell stated that further cuts depend on clear evidence of cooling inflation. The result is that markets anticipate no rate cuts until late 2027.