Yet another inflation gauge came in hot, diminishing investor hopes for early rates cuts by the Federal Reserve.
This report is from today's CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscriberevealed salary increases. The outcome of these widely anticipated discussions is critical and could influence the Bank of Japan's decision on when to exit its negative interest rate policy.
"Very, very poor wholesale inflation report. Obviously, food and energy prices are rising… so that means the Fed will not cut till June or later cause they just don't have the economic tea leaves they want," said Louis Navellier, founder of Navellier & Associates, in aThis underlines the tough balancing act the Fed faces in taming price pressures within the broader economy.
"The CPI and PPI data together suggest that the core PCE deflator for February will be reported rising by 0.4%. Our detailed forecast is 0.37%, which would be marginally better than January's 0.41%, but still much too fast," Pantheon Macroeconomics wrote. "Again, this probably is unsustainable, but the Fed is extremely cautious, and the latest data undoubtedly will make it easier for the hawks to push for a delay," they added."Accordingly, we are changing our call for the first cut, which we now expect in June rather than May."
But investors have to wait until later this month for the PCE data to get a better sense on the Fed's calculation.
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