April 15, 2024 — March Inflation at 3.5 Percent, June Rate Cut Unlikely
APRIL 15, 2024 – MARCH INFLATION AT 3.5 PERCENT, JUNE RATE CUT UNLIKELY
Inflation remains persistent with consumer prices rising 3.5 percent in March, a pick-up from 3.2 percent in February. This was the third straight month inflation surpassed expectations. With inflation remaining firm, it’s becoming unlikely the Fed will lower rates soon. The Fed’s inflation target is 2 percent.
The Fed was hoping the strong January and February data was seasonal, but that does not seem to be the case. The Fed hoped to manage a “soft landing”, lowering rates before experiencing a sharp downturn in the economy, but this report along with the strong job numbers reported last week, could force the Fed to keep rates at current levels for months to come; rates are at their highest in 23-years.
Fed Chair Powell needs “greater confidence” inflation is nearing 2 percent before agreeing to lower rates. Minneapolis Fed Chair Kashkari said last week he can see rates not coming down at all this year. The Fed originally anticipated two or three rate cuts this year, but traders are now betting on only one to two rate cuts in 2024. Just last month, a first rate cut was anticipated for June, but now that seems to be pushed forward to July at least, with a second cut coming in September.