Egg prices. You might not think they have much to do with global finance, interest rates, or stock markets. But right now, the egg prices in the US is causing ripples across the economy – and even shaping expectations for interest rate cuts.

Why Are Egg Prices Soaring?

In the US, egg prices shot up by 15.2% in January alone and a staggering 53% over the past year. The main culprit? Avian flu. This disease has devastated poultry farms, leading to shortages and, as a result, a sharp increase in prices.

If you live in the UK or Europe, you might have noticed similar trends at your local supermarket. Egg shortages due to bird flu outbreaks have hit multiple countries, affecting everything from bakery costs to breakfast habits. But in the US, the price surge has had an even bigger consequence – it helped push inflation up to 3% in January, higher than expected.

What Does This Mean for Interest Rates?

The rise in US inflation has made the Federal Reserve (the Fed) think twice about cutting interest rates. Just a month ago, many investors were expecting the Fed to lower rates multiple times in 2025. But with inflation still proving stubborn, those expectations are shifting.

Fed Chair Jay Powell summed it up:

“We’ve made great progress but we’re not quite there yet. So we want to keep policy restrictive for now.”

In simple terms, that means keeping interest rates higher for longer to make sure inflation doesn’t get out of control again.

Why This Matters for the Global Economy

There’s an old saying in economics: “When America sneezes, the world catches a cold.”

Right now, it seems that when American poultry gets the flu, the financial markets catch a fever. The Fed’s cautious stance on rate cuts has already had an instant negative effect on US stocks and bonds, and global markets tend to follow suit.

For businesses and governments worldwide, US interest rates matter. If the Fed keeps rates high:

• The US dollar stays strong, making imports more expensive for other countries.
• Borrowing costs stay high, affecting businesses and mortgage holders around the world.
• Emerging markets feel the pressure, as many have loans tied to the US dollar.

What Happens Next?

With egg prices playing a surprising role in inflation, the big question is whether costs will come back down. If avian flu eases and supply stabilises, food inflation could slow. But if prices remain high, the Fed may stay cautious – and that means fewer rate cuts than expected.

For now, investors are betting on just one US rate cut this year, despite pressure from President Trump for more. That uncertainty is likely to keep global markets on edge.

So, next time you crack an egg for breakfast, remember: something as simple as poultry prices can have a major effect on economies worldwide.