Friday 23rd February, 2024, page-53

https://www.marketwatch.com/story/fed-plans-to-keep-interest-rates-high-through-the-spring-no-doubt-about-it-57d4f94a?mod=home-page

An excerpt below … the end spring is a long way off yet … June is the moving dates markets have settled on for the first rate cut … with jobs still strong, watch this space imo.

[[[[[ The modern-day Federal Reserve is often a Tower of Babel of sorts: Different voices saying different things about how high U.S. interest rates should be.

Not so now.

Top Fed officials are entirely in lip-sync these days about keeping a benchmark short-term interest rate at a 23-year high, at least through the spring. They don’t see the need to cut rates any time soon.

“What’s the rush,” said Fed Gov. Chris Waller, summarizing the message delivered by a parade of top central bankers over the past week.

That’s disappointing news to home buyers, car buyers and other big borrowers, but the Fed’s rationale is simple: The most recent readings on consumer and wholesale prices came in hotter than expected.

These reports cast doubt on whether inflation will slow as fast as Wall Street expected toward the Fed’s 2% goal.

Buckle up, Fed VIPs say, the path forward to 2% inflation is likely to be “bumpy.” Just listen to them.

”The disinflationary process has been, and may continue to be, bumpy and uneven,” said Fed. Gov. Lisa Cook.

”That disappointing CPI reading highlights that the disinflation process is likely to be bumpy,” echoed Fed Vice Chairman Philip Jefferson.

”We are bound to have bumps along the road to disinflation,” added Philadelphia Fed President Patrick Harker.

The latest “bump” is likely to be the upcoming PCE inflation report due next Thursday. The PCE index, the Fed’s preferred inflation barometer, is also forecast to run on the hotter side. Economists polled by The Wall Street Journal predict a spicy 0.4% increase in the core PCE for January.

”My expectation is that the rate of inflation will continue to decline, but more slowly than the pace implied by where the markets signal monetary policy should be,” said Raphael Bostic, president of the Atlanta Fed. ]]]]]

Dex