_{ECONOMIC NEWS}

Fed Plans to Maintain Elevated Interest Rates in Response to Persistent Inflation

A few months ago, Wall Street expected the Federal Reserve to start cutting interest rates in May. However, unexpectedly high inflation reports early in the year have changed these expectations. Now, the discussion has shifted from the number of rate cuts to whether there will be any cuts at all this year.

Currently, Fed officials are anticipated to keep interest rates steady at a 22-year high of 5.25% to 5.5% and only make slight modifications to their policy statement at their upcoming meeting. Despite signs of slowing economic growth, persistent high inflation means there's no immediate need for rate cuts, according to Greg McBride, chief financial analyst at Bankrate.

Investors are particularly keen to hear from Fed Chair Jerome Powell in his post-meeting press conference about the future direction of the Fed's policies. Recent statements and inflation data have led many, including Powell, to suggest maintaining higher rates for an extended period until inflation is under control. Updated Fed projections indicate potential rate cuts by the end of 2024, but recent comments have cast doubt on this timeline. The market now expects fewer rate cuts this year, adjusting expectations from six cuts to just two, with the first cut possibly in September. Read More.

_{FINANCIAL FOCUS}

The Cost of Raising a Child in the US Continues to Climb

High inflation in the U.S. has significantly increased the cost of raising a child. A LendingTree study reveals that child care costs alone surged nearly 20% from 2016 to 2021, with annual expenses reaching $21,681. As a result, the typical family now spends around $237,482 to raise a child over 18 years, not including college expenses. The financial strain has led about 55% of parents to incur debt for child-related costs. Key expenses include food (21%), child care (19%), and clothing (13%).

The end of the American Rescue Plan's emergency funding for child care in September has put additional pressure on the industry, potentially leading to tuition hikes, layoffs, and closures, with an estimated 70,000 child care programs at risk of shutting down. This could further increase costs and significantly impact U.S. households, over 12% of which regularly pay for child care. The ongoing high prices in other areas like food, shelter, and energy continue to strain family budgets, with Americans now spending approximately $1,069 more per month than before the inflation crisis began. Read Now.