Student debt in the US has more than doubled over the past two decades and now stands at a massive $1.8 trillion, bigger than auto loans or credit card debt. The monthly repayments on student loans were suspended more than three years ago at the height of the Covid crisis, but that reliefâs just about to end. And thatâll saddle Americans again with the weight of those payments, typically $200 to $300 a month. That, combined with a near-30% surge in oil prices since June, could knock more discretionary spending power out of consumersâ hands. The Fed left its target range for its key interest rate unchanged at a 22-year high of 5.25% to 5.5%. However, the Fedâs latest âdot plotâ projections showed that 12 out of 19 officials want to hike rates one more time in 2023 to rein in inflation once and for all. The plot also revealed that most officials now see a much slower path of rate cuts in 2024 and 2025. They anticipate a drop to about 5.1% by the end of 2024, well higher than the 4.6% they expected in June. They predict further declines to 3.9% and 2.9% by the end of 2025 and 2026, respectively. Britainâs stubborn inflation rate made a small but surprising drop in August, falling to its lowest level in 18 months. Consumer prices in the UK rose by âjustâ 6.7% on a yearly basis in August, defying economistsâ expectations that they would actually heat up from the 6.8% they notched in July. Adding to the good news, core inflation, which excludes food, energy, alcohol, and tobacco prices, fell even more sharply, to 6.2% in August from 6.9% the month before. Economists had expected the rate to hold steady. The bigger-than-expected drop in inflation gave the BoE the confidence to hold interest rates steady last week. It maintained its key rate at 5.25%, marking the first pause after 14 consecutive rate hikes that date back to December 2021, when rates stood at just 0.1%. The decision, however, wasn't unanimous: five officials voted to leave rates unchanged, while four voted for an increase to 5.5%. Regardless, the BoE emphasized that this was merely a pause and that rate hikes would be back if inflation doesnât fall further as expected. The OECD upped its 2023 global growth outlook to (a still-sluggish) 3% after a stronger-than-expected start to the year, buoyed by lower energy prices, Chinaâs reopening, and a resilient US economy. But the organization lowered its outlook for 2024 to 2.7%, from the previously forecast 2.9%, as high interest rates weigh on economic activity and Chinaâs once-vaunted rebound disappoints. Not counting Covid-plagued 2020, that would be the weakest annual expansion since the global financial crisis. |
