The interest rate cut summer that wasn’t

While Canada and the European Central Bank cut rates this month, this week will be crucial to determine whether that trend persists globally. At the beginning of the year, 90% of economists in Reuters polls predicted the US Federal Reserve would cut rates starting in March, with other large economies following suit through the summer. But sticky inflation has put off any US rate cut until September at the earliest, leaving the ECB to take the unusual step of going ahead of the Fed. Further delays from other banks this week could “reaffirm how June … may increasingly turn out to be a widespread display of hesitancy,” Bloomberg wrote.

The chance for rate cuts this summer may be slim, but economists predict they’re still on the way — just a little later in the year. The International Monetary Fund forecasts the global economy will grow 3% this year, saying it has proved surprisingly resilient. “With disinflation continuing to drive global inflation lower, the path is clear for those central banks to move to more accommodative monetary policies,” The Real Economy Blog wrote. One challenge to that expansion, though, is the “divergence in disinflation paths among major economies and prolonged high interest rates,” CNBC wrote.

In the UK, some questioned Prime Minister Rishi Sunak’s decision to call a July election, rather than wait until the fall, because he would have a greater chance of seeing a rate cut before the election. But such a move “would have only delayed the inevitable,” The Guardian’s economics editor wrote, arguing that moves toward an economic recovery aren’t enough for Sunak to win, given the strong anti-incumbency sentiment affecting world leaders. Also, a September rate cut in the UK isn’t guaranteed: Taylor Swift’s sold-out London shows in August could cause a surge in hotel prices, increasing inflation and delaying yet another rate cut, strategists at TD Securities wrote.