Federal Reserve Chairman Colin Powell sent a message last weekClass2videopokerHigh interest rates will continue at present; released on FridayClass2videopokerThe latest inflation figures reinforce this message.
The core personal consumption expenditure price index, the Fed's preferred indicator of inflation, rose 0% in March from the previous month.Class2videopoker.3%, up 2% from the same period last year.Class2videopoker.8%. Government data showed that the figures earlier this year were also slightly revised up.
Three consecutive months of worrying inflation data show that US inflation has stalled towards the central bank's 2 per cent target and suggests that the first interest rate cut has been further delayed. Investors expect interest rates to be cut only once or twice this year, starting in November, but there is growing concern that the Fed may not lower borrowing costs at all in 2024.
Ben Ayers, an analyst at Nationwide, said the inflation data for the year to March were so hot that interest rates should not be cut in the first half of 2024. "there is also a risk that further economic resilience will delay interest rate cuts until 2025, which is a key downside risk to economic growth next year."
Powell said last week that if price pressures persist, the Fed can keep interest rates unchanged "for a long time as necessary."