Reality bites as Wall Street’s rate cut dream disappears

Stan Choe
AP Business Writer

NEW YORK (AP) — After a long staring contest between Wall Street and the Federal Reserve, investors blinked first. Stakes were high in the standoff because higher rates can stamp out inflation, though at the risk of creating a recession because they slow the economy. Higher rates also hurt investment prices in the meantime. But a flood of data reports since the start of February have forced Wall Street to bring its forecasts for rates closer to the Fed’s. Key among them were reports showing inflation at both the consumer and wholesale levels isn’t slowing as quickly or as smoothly as hoped.