Euphoria on Fed Pivot Prospects Ignores the Lagging Hangover (1)

As Wall Street rallies on hopes for interest rate cuts in 2024, the real world is still coming to terms with the full weight of central bank tightening.

Over the past two years, money has been squeezed out of the market by central banks fighting to get an inflation surge under control. That’s made borrowing more expensive for governments, corporates and consumers, and will keep denting spending well into next year.

“The bottom line is that the Federal Reserve hikes are biting and will continue to in 2024,” said Torsten Slok, chief economist at Apollo Global Management. “Restrictiveness is ...