Investors have been closely watching for clues as to when the Federal Reserve will begin cutting interest rates. The market is currently pricing in a near 80% chance that the Federal Reserve will cut interest rates in June, which is contrary to previous expectations that the Federal Reserve will start cutting interest rates in May. .
“For those betting that the Fed will start cutting interest rates soon,” Raymond James chief economist Eugenio Aleman wrote in response to the better-than-expected report. This is a terrible report for people.”
Ellen Zentner, chief U.S. economist at Morgan Stanley, added: “The acceleration in core PCE growth is consistent with our view of a rocky road ahead. We believe first-quarter 2024 sequential numbers will generally be higher than what we expect in 2024.” levels seen in 2018.” over the past 6 months. This acceleration will be a factor in delaying the decision to start cutting interest rates until June this year. “
Citigroup, on the other hand, warned that the red-hot inflation report could have an impact on the recent stock market rebound.
Stuart Kaiser, Citi’s head of U.S. equity trading strategy, wrote: “Strong core CPI is not a game changer, but may drive a short-term correction. Against the backdrop of strong growth data, it will be difficult for the Fed to continue its policy despite very Strict but an early cut as some investors want and raises concerns about overheating.”
“We should see a pullback, maybe in the 2-4% range, but that’s somewhat limited by the fact that the economy is still pretty strong,” he continued.