The Federal Reserve has acknowledged U.S. inflation has perked up,
adding to the conviction that interest rates will rise faster this year
than previously anticipated. Price data due next week might cement
investors’ view.
While leaving the benchmark Fed funds rate
unchanged at its last meeting, the central bank included somewhat more
hawkish language in its statement, noting that “on a 12-month basis,
both overall inflation and inflation for items other than food and
energy have moved close to 2 percent”.
Latest data showed the U.S. economy added 164,000 jobs, less than forecast, while wages barely rose. However, the Fed’s preferred inflation measure, the so-called core PCE, rose 1.9 percent in the 12 months through March, the biggest increase since February 2017.
Producer price and consumer price indexes are due next Wednesday and Thursday, respectively, and investors fear that stock and bond markets won’t get much reprieve from the rate-hike concerns of recent weeks.
The Fed is currently signalling two more rate rises this year, but the inflation figures, if strong enough, could just confirm expectations that it will squeeze in a third.
Latest data showed the U.S. economy added 164,000 jobs, less than forecast, while wages barely rose. However, the Fed’s preferred inflation measure, the so-called core PCE, rose 1.9 percent in the 12 months through March, the biggest increase since February 2017.
Producer price and consumer price indexes are due next Wednesday and Thursday, respectively, and investors fear that stock and bond markets won’t get much reprieve from the rate-hike concerns of recent weeks.
The Fed is currently signalling two more rate rises this year, but the inflation figures, if strong enough, could just confirm expectations that it will squeeze in a third.
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