The inflation in USA was, for the second consecutive month, higher than expected and effectively closed the door on the possibility of a cut in the interest rates of the Federal Reserve (Fed) before June.
The prices of the gasoline and housing pushed the February consumer price index up 3.2% from a year earlier, an acceleration from January’s 3.1% increase. The Underlying inflationexcluding energy and food prices, slowed less than economists projected and, on a quarterly and semi-annual basis, actually gained ground.
Until recently there had been speculation that a rate cut could still occur at its next meeting on April 30-May 1 if the inflationwhich fell rapidly last year and then jumped in January, is back on track toward the 2% goal.
But Tuesday’s report “makes ugly reading that will do nothing to calm nerves” in the Federal Reservewrote BMO economist Scott Anderson. “Clearly, the restrictive monetary policy has not yet completely done its job and a Fed patient and slightly aggressive must be maintained for the monetary medicine to take full effect.
Core inflation of services excluding rents, a measure to which the chairman of the Federal Reserve, Jerome Powellhas said it is paying close attention, rose 0.5% in February from the previous month, and in the last three months it has grown on an annualized basis by 6.8%, compared to the 6.7% pace in January.
Those very high readings will add to the caution of the Fed on the inflation outlook, said Kathy Bostjancic of Nationwide to Reuters.
Traders of futures contracts that adjust to the monetary policy rate of the Fed They rate a less than one in 10 chance of a rate cut in May, but continue to see around a 70% chance of a cut by June.
After the data of inflationslightly reduced their view on how much it will cut rates by the end of the year, although they generally still expect the central bank to apply four quarter-point cuts from June to December.
Source: Ambito
