USDU - U.S. Inflation Quashes The Chances Of A June Fed Rate Cut
2024-04-11 00:04:00 ET
Summary
- US inflation came in at 0.4% MoM for the third consecutive month, more than double the rate we need to consistently hit to bring inflation down to 2% YoY.
- Expectations for a June Federal Reserve interest rate cut have collapsed, with the higher for longer narrative on rates firmly in place.
- September is going to be the earliest opportunity for any policy easing.
By James Knightley, Chief International Economist
US inflation remains too hot for comfort
US core consumer price inflation came in at 0.4% month-on-month, above the 0.3% consensus - only one forecaster predicted such an outcome, so just like last Friday's jobs report, this is another significant upside surprise that should quash expectations of a June Federal Reserve interest rate cut. 15bp of cuts were priced ahead of time, but this has now collapsed to just 5.5bp. We have two more jobs reports and two CPI reports, but to deliver a June cut we would likely need to see payrolls growth drop closer to 100k and both core CPI prints to come in at 0.2% MoM - the latter of which is on the day of that 12 June FOMC meeting....
U.S. Inflation Quashes The Chances Of A June Fed Rate Cut