7.2 C
Sunday, March 26, 2023

Key US consumer data fuels rate hike bets

Must read

- Advertisement -

The expense was probably seen driven by an 8.7% cost-of-living adjustment, the largest since 1981, for more than 65 million Social Security recipients, boosting revenue. He too was probably favored by the Difficulties in eliminating seasonal fluctuations of the data at the beginning of the year.

- Advertisement -

However, these good results put consumer spending on a path of higher growth at the beginning of the first quarter. consumer spending slowed down in the fourth quarterwith most of the loss of momentum occurring in the last two months of 2022.

The strength of consumer spending, combined with a resilient job market, suggests that the economy is far from recession. Moody’s Analytics believes that the economy will experience what he called a “slowcession”in which growth almost comes to a standstill, but without going backwards.

Financial markets have been on edge since the release of the strong report from employment from January to the beginning of this month.

- Advertisement -

It is expected that the Fed makes two additional 25 basis point rate hikes in March and May, and financial markets are betting on another rise in June. The US central bank has raised its official interest rate by 450 basis points since last March from near zero to a range between 4.50% and 4.75%.

He price index of personal consumption expenditures (PCE) shot up 0.6% last month, after rising 0.2% in December. In the 12 months to January, the PCE price index accelerated 5.4% after increasing 5.3% in December.

Excluding volatile food and energy components, the PCE price index rose 0.6% after gaining 0.4% in December. The so-called price index Core PCE rose 4.7% yoy in Januaryafter advancing 4.6% in December.

The Fed tracks PCE price indices for monetary policy.

The government reported Thursday that inflation rose much faster than initially thought in the fourth quarter., mainly reflecting improvements in consumer and producer price data released this month. Some economists believe that the road to disinflation will be slow and bumpy.

What does the market expect for rates?

Futures traders linked to official interest rates The Federal Reserve raised bets on Friday that the US central bank will raise rates at least three more timesafter inflation was reported to have accelerated in January.

The returns implicit in the contracts of Fed funds futures rose after the Commerce Department reported that the personal consumption expenditures price index, the metric by which the entity measures its 2% inflation target, rose 5.4% year-on-year in January, with core inflation higher than expected of 4.7%.

The Federal Reserve’s current range for its key interest rate is 4.5-4.75%, and futures contract prices point to increasingly firm expectations that the rate will go as high as 5, 25%-5.5% for June.

Source: Ambito

- Advertisement -

More articles


Please enter your comment!
Please enter your name here

- Advertisement -

Latest article