eToro Comment on US Inflation Data.” While the Fed is not expected to cut rates today - or be rushed by rate cuts from other G7 central banks - today's inflation report is a step in the right direction as investors look for cues from the president. Powell on what the Fed's next steps could be,” says Bret Kenwell, US investment analyst.
With a lower-than-expected CPI report, investors are waiting to see how the Fed will impact markets later this afternoon. The cold inflation numbers should boost investor confidence in a Fed rate cut in the second half of 2024, but will the Fed throw gasoline on the fire or pour cold water when it comes to rate cuts? ?
Inflation cooled more than expected last month, and core goods and food inflation continued to decline. Core services inflation has been one of the most difficult components of the inflation report, although it has cooled to its lowest reading since February.
Given last month's inflation readings and some of the softer economic reports, it's not too surprising to see inflation cooling a bit. This is exactly what the Fed needs to see to justify rate cuts later this year. The market expects two rate cuts between now and the end of the year, which seems reasonable as long as inflation continues to fall and the economy stays on track.
With the Bank of Canada and the European Central Bank already cutting rates, all eyes will be on the Fed this afternoon. While the Fed is not expected to cut rates today - or be rushed by rate cuts from other G7 central banks - today's inflation report is a step in the right direction as investors look for cues from the president. Powell on what the Fed's next steps could be.
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