Written by Ann Safir
(Reuters) – Prospects that the Federal Reserve will make its first interest rate cut before the end of the summer received a body blow on Wednesday with another U.S. inflation report highlighting the persistence of price pressures across the U.S. economy. Ta.
After months in which the Fed's first policy easing began was concentrated in June, a third consecutive year of better-than-expected consumer inflation has thrown financial markets into turmoil, and traders are now looking ahead to the Fed's mid-September forecast. We are betting squarely on the first rate cut meeting. Quick retreat.
And the odds that the Fed won't cut rates at all this year have jumped from a barely measurable less than 1% a week ago to about 10% after Wednesday's inflation surprise. For now, that remains an outside view, but there is increasing discussion among economists and some Fed officials as a possibility.
Atlanta Fed President Rafael Bostic said in an interview with Yahoo Finance, “Given that the U.S. economy has been very strong, very strong and resilient, we have to delay further rate cuts.'' I can't even rule out the possibility.” Tuesday. Bostic has previously said he expects a single interest rate cut to occur by the end of the year, with implementation occurring in the fourth quarter.
The consumer price index rose 3.5% in March from a year earlier, accelerating from a 3.2% rise in February, according to a report released Wednesday by the U.S. Department of Labor. Core consumer price inflation, which subtracts food and gasoline prices, which economists use as a measure of price stickiness, rose 3.8% from a year earlier, the same pace as February.
“This report does not create the additional confidence that authorities were looking for,” said Omail Sharif of Inflation Insights.
Fed officials, including influential Fed Director Christopher Waller, will assess whether higher-than-expected inflation in January and February is just a milestone toward the Fed's 2% inflation target. says more data is needed.
Traders now expect the Fed to implement its first quarter-point rate cut at its Sept. 17-18 meeting, raising its policy rate target to a range of 5% to 5.25%, with one more rate cut before the end of the year. I predict that. Year.
“The lack of easing in inflation undermines Fed officials' confidence that inflation is on a sustainable trajectory back to 2%, pushing back rate cuts to as early as September and pushing rates cuts to next year. may be postponed,” the National Chief Economist wrote. Kathy Bojancic after the CPI report.
(Reporting by Ann Safir; Additional reporting by Stephen Culp; Editing by Andrew Heavens and Andrea Ricci)
