Latest inflation data reinforces Powell\’s shift to keeping interest rates high for longer

Federal Reserve Chairman Powell sent a message last week: the current high interest rates will continue; the latest inflation data released on Friday reinforced this message

Federal Reserve Chairman Jerome Powell sent a message last week that current high interest rates will continue; the latest inflation data released on Friday reinforced this message.
The core personal consumption expenditures price index, the Fed\’s preferred inflation measure, rose 0.3% month-on-month in March and 2.8% year-on-year.
Figures from earlier this year were also revised slightly upward, government data showed.
Three consecutive months of worrying inflation data show that U.S. inflation has stalled towards the central bank\’s 2% target and indicate that the first interest rate cut has been further delayed.
Investors expect only one or two rate cuts this year, starting in November, but concerns are growing that the Fed may not lower borrowing costs at all in 2024.
Ben Ayers, an analyst at Nationwide, said that the inflation data as of March this year are hot and there should be no interest rate cuts in the first half of 2024.
There is also a risk that further economic resilience will delay interest rate cuts until 2025. This is a key downside risk to economic growth next year.
Powell said last week that the Fed could keep interest rates on hold for as long as necessary if price pressures persist.

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