It looks increasingly unlikely that the Federal Reserve will be cutting interest rates after a batch of stronger-than-expected economic data coupled with fresh commentary from policymakers.Central bankers still lack the confidence to cut and even an unspecified few say they could be open to hiking if inflation gets worse.
A batch of stronger-than-expected economic data coupled with fresh commentary from policymakers is pointing away from any near-term policy easing. Traders this week again shifted futures pricing, moving away from the likelihood of a reduction in rates in September and now anticipating just one cut by the end of the year."The economy may not be cooling off as much as the Fed would like," said Quincy Krosby, chief global strategist at LPL Financial.
Some members at the most recent FOMC meeting, which concluded May 1, even wondered whether "high interest rates may be having smaller effects than in the past," the minutes stated. The informal consensus is for a monthly gain between 0.2% and 0.3%, but even that relatively muted gain might not give the Fed much confidence to cut. At that rate, annual inflation likely would be stuck just shy of 3%, or still well above the Fed's 2% goal.
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