Fresh data on inflation and unemployment filings gave Federal Reserve officials more reasons to hold off on cutting interest rates, even as retail sales suggested a slowdown in consumer spending.
“When the Fed is contemplating a series of rate cuts and is confronted by suddenly slower economic growth and suddenly brisker inflation, they will respond to the new news on the inflation side every time,” Chris Low and Mark Streiber of FHN Financial said in a note. “As long as wholesale inflation has stabilized or shifts higher and retail inflationary pressures continue, the Fed pause will stretch on.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, sees the core PCE advancing 0.4% when rounded, which would roughly equal January’s print. Other forecasters, including those at Barclays Plc and Bank of America Corp., see the February number softening a bit to around 0.3% — which would still mark the strongest consecutive increase in a year.
“Six weeks ago, the FOMC was seeking ‘greater confidence’ that inflation was moving back to 2% and since then, we have gotten nothing but bad news on the inflation front,” Stanley said in a note, referring to the Federal Open Market Committee, which sets monetary policy.The Fed will also likely be inclined to stay on pause for longer given the strength of the labor market. Applications for U.S.
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