Oil Shocks Push Federal Reserve Rate Cuts Into 2027
Consumer sentiment has reached its lowest level on record. This result follows the biggest monthly jump in inflation since 2022, which was driven by surging energy prices. Oil futures reached a record high of more than $144 a barrel and gasoline prices rose over $4 a gallon. These price shocks were caused by a six-week war in the Middle East and the closure of the Strait of Hormuz. The Federal Reserve is now expected to delay its return to a neutral rate of the current 3.5% to 3.75% range to around 3%. Allspring Global Investments expects one predicted rate cut to be pushed into 2027.
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