As with any dependency, withdrawal will be painful. At this point, nearly every facet of the American economy has reshaped itself around near-zero interest rates. Bush was president and Taylor Swift was in elementary school. Rates haven’t been this high since George W. Because before we get to the good place, higher-for-longer is going to feel bad-or at least very weird. Americans just have to survive the transition. Higher-for-longer should herald a fairer, more sustainable economy. America since the Great Recession has been living through an anomalous period of super-low rates that contributed to widening inequality and speculative-asset bubbles. Wall Street has begun summing up the situation with a simple phrase: “higher for longer.”Īs jarring as 5 percent interest may seem, by historical standards it is pretty modest and, believe it or not, represents a healthy adjustment. Activity in the bond markets suggests that rates could stay near that level for the better part of a decade. But while the Fed may be done raising rates, it’s not cutting them back to zero anytime soon.Īccording to the central bank’s most recent projections, rates will stay where they are for most of 2024 and will fall only slightly in 2025, ending the year at about 4 percent-more than twice as high as in late 2019. Now inflation appears under control, having fallen steadily since July 2022. Over the course of 18 months, rates shot from near zero to above 5 percent and have remained there since. When inflation started to spike in 2022, the Federal Reserve made the only move it could: raising interest rates. Produced by ElevenLabs and NOA, News Over Audio, using AI narration.

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