Post by Webster on Mar 10, 2024 18:21:30 GMT -5
Yahoo Finance: Slow US Inflation Retreat Is Set to Bolster Fed Patience on Rate Cuts
(Bloomberg) -- Inflation in the US probably abated only gradually last month and retail sales rebounded, illustrating why the Federal Reserve is in no rush to lower interest rates.
The core consumer price index, a measure that excludes food and fuel for a better picture of underlying inflation, is seen rising 0.3% in February from a month earlier after a 0.4% advance to start the year. The Labor Department will issue its CPI report on Tuesday.
The price gauge is projected to have risen 3.7% from a year ago, which would mark the smallest annual advance since April 2021. While the year-over-year figure is well below the 6.6% peak reached in 2022, the pace of progress more recently has been modest.
That squares with congressional testimony from Fed Chair Jerome Powell in the past week, who said that while it would likely be appropriate to cut rates “at some point this year,” he and his colleagues aren’t ready yet.
That’s because the Fed wants convincing signs that inflation is nearing their 2% target, based on a separate gauge — the personal consumption expenditures price index. In addition to the CPI, the government’s producer price index on Thursday will help inform the PCE index, which will be released after the US central bank’s March 19-20 policy meeting.
Fed officials will observe a blackout period for speaking engagements ahead of that meeting.
Away from inflation, there are scant signs of stress in the economy. The latest jobs report pointed to moderating yet healthy employment growth that will keep consumer spending afloat.
Government figures on Thursday are expected to show a 0.8% advance in February retail sales following a drop of the same magnitude a month earlier. Such an outcome would indicate a return of shoppers who took a breather after a strong holiday-shopping season. Other US data in the coming week include February industrial production and the University of Michigan’s preliminary March consumer sentiment index.
Turning north, national balance sheet data from Canada will offer a look at household finances as high interest rates weigh on heavily indebted mortgage-holders.
Elsewhere, wages in Japan and the UK, plus a flurry of inflation numbers from Sweden to Brazil, will keep investors busy. Japan’s closely watched annual wage negotiations reach a milestone with the release on Friday of the results from the main union group, Rengo.
The numbers are expected to top last year’s results, which were already the best in decades, paving the way for the Bank of Japan to end its negative rate either this month or next.
Also feeding into that rubric will be Japan’s final fourth-quarter gross domestic product statistics on Monday. They’re likely to be revised higher to possibly pull the nation out of a technical recession, in what would be another green light for the BOJ.
Elsewhere, India’s industrial output may have increased at a faster clip in January, while February inflation is seen cooling a tad. India, Indonesia and the Philippines get trade data in the coming week, and Australia will get the February NAB Business Conditions gauge and household spending numbers.
The core consumer price index, a measure that excludes food and fuel for a better picture of underlying inflation, is seen rising 0.3% in February from a month earlier after a 0.4% advance to start the year. The Labor Department will issue its CPI report on Tuesday.
The price gauge is projected to have risen 3.7% from a year ago, which would mark the smallest annual advance since April 2021. While the year-over-year figure is well below the 6.6% peak reached in 2022, the pace of progress more recently has been modest.
That squares with congressional testimony from Fed Chair Jerome Powell in the past week, who said that while it would likely be appropriate to cut rates “at some point this year,” he and his colleagues aren’t ready yet.
That’s because the Fed wants convincing signs that inflation is nearing their 2% target, based on a separate gauge — the personal consumption expenditures price index. In addition to the CPI, the government’s producer price index on Thursday will help inform the PCE index, which will be released after the US central bank’s March 19-20 policy meeting.
Fed officials will observe a blackout period for speaking engagements ahead of that meeting.
Away from inflation, there are scant signs of stress in the economy. The latest jobs report pointed to moderating yet healthy employment growth that will keep consumer spending afloat.
Government figures on Thursday are expected to show a 0.8% advance in February retail sales following a drop of the same magnitude a month earlier. Such an outcome would indicate a return of shoppers who took a breather after a strong holiday-shopping season. Other US data in the coming week include February industrial production and the University of Michigan’s preliminary March consumer sentiment index.
Turning north, national balance sheet data from Canada will offer a look at household finances as high interest rates weigh on heavily indebted mortgage-holders.
Elsewhere, wages in Japan and the UK, plus a flurry of inflation numbers from Sweden to Brazil, will keep investors busy. Japan’s closely watched annual wage negotiations reach a milestone with the release on Friday of the results from the main union group, Rengo.
The numbers are expected to top last year’s results, which were already the best in decades, paving the way for the Bank of Japan to end its negative rate either this month or next.
Also feeding into that rubric will be Japan’s final fourth-quarter gross domestic product statistics on Monday. They’re likely to be revised higher to possibly pull the nation out of a technical recession, in what would be another green light for the BOJ.
Elsewhere, India’s industrial output may have increased at a faster clip in January, while February inflation is seen cooling a tad. India, Indonesia and the Philippines get trade data in the coming week, and Australia will get the February NAB Business Conditions gauge and household spending numbers.