The Fed gives in to the clamour for looser money

For most of 2023 big central banks have shrugged off investors’ bets that interest-rate cuts were imminent. That all changed on December 13th, when the Federal Reserve signalled that it expected to cut rates by three-quarters of a percentage point in 2024, coming close to endorsing markets’ doveish views and causing a frenzy of buying on a delighted Wall Street. At the start of the month Jerome Powell, the Fed’s chairman, had said that it was premature to discuss the . Now he says loosening is under discussion for the first time since surged after the covid-19 pandemic.Could the pivot set off a global move towards monetary easing? As we went to press the Bank of England and the European Central Bank were due to announce their monetary-policy decisions, having, like Mr Powell before this week, recently pushed back against the idea that rate cuts were imminent. The irony is that a turn towards looser money looks far more appropriate in Europe than it does in America, where Mr Powell is gambling that recent good news on inflation will keep rolling in.