Interest rates in the U.S. are likely to “peak just below 5%, with cuts starting later this year,” Paul Ashworth, chief North America economist at Capital Economics, writes in a report ahead of next week’s Federal Reserve meeting. “We expect the Fed to downshift to a 25bp rate hike at the upcoming FOMC meeting, taking the fed funds rate to between 4.50% and 4.75%, but there could be one last hawkish sting in the tail,” he writes. Mr. Ashworth also calls for “only one additional 25 bp rate hike in March,” while expecting inflation to fall faster than anticipated. “The markets are no longer buying what the Fed is selling,”…
