Do US consumer prices contribute to supporting the position of the US Federal Reserve:
The US Federal Reserve has convinced investors to rule out a cut during next March
in light of the uncertainty of an actual decline in the inflation trend,
which fell to its lowest level of around 2.9%.
However, Federal Reserve Governor Jerome Powell clarified that the last six readings
were not sufficient to confirm the trend of inflation towards decline.
At the same time, the US Bank fears an early cut in interest rates
before inflation reaches the target of around 2%.
At that time, inflation may stabilize at high levels and far beyond the specified target.
In return, it fears that it will keep US interest rates high for a long period for fear of
recession.
Topics
The importance of upcoming economic data
Details
During this week, and specifically tomorrow, Tuesday,
we are looking forward to the US consumer price data,
which reflects more closely and proactively the actual inflation prices,
which the US Federal Reserve looks at in the report on monetary policy,
and as Powell explained while responding to journalists’ questions,
the bank is also looking forward to the consumer price data
and gives it importance because it reflects inflation.
American Economists expect annual consumer prices to decline from levels of 3.4%,
which was the previous reading, which was positive at the time.
Expectations for the next reading are negative, around 2.9%.
Expectations also indicate a decline in monthly consumer prices from 0.3% to 0.2%,
and concerning consumer prices
The basic reading is expected by experts to vary and stabilize
as the previous reading was around 0.3% without change
The importance of upcoming economic data
The upcoming data is important for investors, as providing an actual reading
indicating a decline in US inflation will support the issue of inflation continuing
in the context of decline and approaching the US Federal Reserve’s target of around 2.0%,
which will move the Fed to begin the process of reducing interest rates,
which promises the markets a reduction three times during the current year, and in return.
It also exists in light of the labour market data, which may add inflationary pressures,
and at that time we may see a reading higher than expected,
and it will certainly be better if the reading is higher than the previous reading,
which was already positive.
Then this will mean that the US Federal Reserve will have to wait more time,
which is what the mechanism is looking forward to.
All eyes are now on the Fed reducing interest rates next May,
with fears that the extended interest rate period will extend.
Do US consumer prices contribute to supporting the position of the US Federal Reserve?