Citi still expecting a US rate rise this week
will probably give the Federal Reserve cause for a pause on lifting rates, but the economists at Citi are perhaps alone when they say the stickiness of core inflation will have the central bank surprise people this week.Americans love their cars and their prices are contributing to core inflationWhile that’s looking good for the Fed’s target range of 2-3 per cent, it’s core inflation - which excludes food and energy - that Jerome Powell and his team focus on.
“While lack of market pricing for a rate hike admittedly makes tomorrow’s outcome a very close call, we see market pricing as misled.” “We would expect some hawkish surprise at some point as underlying inflation remains stably too strong.” As a result, used cars were also largely responsible for the 0.6 per cent monthly increase in core goods.
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