'For the first time this year, investors understand that the Fed not only has higher to go, but also that there's a majority chance that rates don't go any lower at any point this year than they are right now.' -TianaTheFirst
For the first time since the start of the year, markets have finally understood that the Federal Reserve is not going to pivot into cutting the federal funds rate, but for the first time since it began its fastest rate-tightening campaign in four decades, the Fed is actually going to skip hiking rates.
It is not that the data strongly support skipping an interest rate increase. Although the headline consumer price index came in at 4%, below expectations for May, the Fed's preferred measure of core personal consumption expenditures inflation actually rose to 4.7% year over year, well past estimates. Worse still, the remaining headline inflation, still at least twice as high as the Fed's target, consists of the stickiest of price categories.
While reduced energy prices over the past year have provided welcome relief to consumers, they haven't come as a result of rate hikes, and those energy prices have driven the majority of the reduction in headline inflation. It's safe to assume that we would have gotten some sort of signal or leak if the Fed were to decide against the tactical skip telegraphed by Powell, but the data certainly do not back up such a strategy.
That's why for the first time this year, investors understand that the Fed not only has higher to go, but also that there's a majority chance that rates don't go any lower at any point this year than they are right now.
Indonesia Berita Terbaru, Indonesia Berita utama
Similar News:Anda juga dapat membaca berita serupa dengan ini yang kami kumpulkan dari sumber berita lain.
U.S. inflation eases to 4.0% in May as key Fed decision looms By Investing.com⚠️BREAKING: *U.S. CPI EASED TO 4% IN MAY TO ITS LOWEST LEVEL IN OVER TWO YEARS 🇺🇸🇺🇸
Baca lebih lajut »
Markets think a Fed pause is a done deal after inflation cools in MayMarkets think that a Fed pause on rate hikes is a sure thing after CPI shows inflation falling further in May
Baca lebih lajut »
US inflation may have eased in May, but underlying price measures likely remained highConsumer price increases in the United States likely slowed sharply last month, extending a steady easing of inflation over the past year
Baca lebih lajut »
US inflation may have eased in May, but underlying price measures likely remained highConsumer price increases in the United States likely slowed sharply last month, extending a steady easing of inflation over the past year.
Baca lebih lajut »
Treasury yields rise as investors anticipate key inflation data, Fed policy meetingU.S. Treasury yields climbed on Monday as investors braced themselves for fresh inflation data and the Fed’s next policy meeting and interest rate decision.
Baca lebih lajut »
U.S. stock futures flirt with fresh highs ahead of inflation data, Fed decisionStock futures looked to extend their recent rally Monday -- though the positivity was tinged with caution ahead of a week stuffed with potential tripwires.
Baca lebih lajut »