San Francisco Fed President Mary Daly suggested in an interview this week that slower rate increases might be a good idea, but that the Fed would need to continue boosting rates “until the job is well and truly done.” Investors are holding their breath. They remain concerned that the central bank might be raising rates too far and too fast in its inflation fight, potentially slowing the U.S. economy down too much and sending us on a path to recession. Thursday’s CPI report will provide further clues to investors. Big declines in inflation would boost optimism that the Fed won’t be as aggressive going forward, while a report that misses economist expectations could signal that the bank might hand us even more rate hikes. With our central bank here and other banks abroad raising rates to fight inflation, global economic growth is set to slow sharply, the World Bank said today. It now forecasts global growth to slow to 1.7% this year, a big drop from the 3% gross domestic product (GDP) growth estimates the bank made in June. That’s the weakest forecast in three decades, outside of global recessions. Here in the U.S., the World Bank forecasts GDP growth to rise just 0.5%.
