Inflation remains high despite some cooling in March, with prices rising at an annual rate of 2.8% excluding food and energy. While spending remains strong, the personal saving rate has fallen as households dip into savings to cope with rising costs. The Federal Reserve will likely continue to raise interest rates to combat inflation, which is still well above its target of 2%.
Federal Reserve Chair Jerome Powell and Bank of Canada Governor Tiff Macklem will discuss the economy and monetary policies between their respective countries. The market expects the Fed to maintain steady interest rates until September, despite rising inflation. This speech will likely be Powell's last before the next Federal Reserve meeting.
The US economy is not experiencing sufficient inflation to meet Federal Reserve goals. Therefore, interest rate cuts are unlikely. The current rate of inflation is above the Fed's target of 2%, and recent data suggests it will take longer than expected to achieve this goal.
The Federal Reserve (Fed) may lower interest rates this year despite ongoing high inflation. This is according to BlackRock CEO Larry Fink, who believes the Fed may struggle to meet its 2% inflation target. Fink suggests inflation could stabilize around 2.8-3%, which he would consider a victory. Despite current market expectations for a more dovish Fed, some officials remain cautious until they witness a significant decline in inflation.
Inflation in the euro zone has slightly decreased to 2.4%. This has led to expectations that the European Central Bank will begin reducing interest rates in June. While some sectors remain inflationary, overall price pressures have eased. A low unemployment rate and the recent messaging of ECB officials support the likelihood of rate cuts in the near future.
Fed Chair Powell is speaking today. Last month, he said the Fed may lower interest rates later this year, but needs to see inflation declining towards its 2% goal. Other Fed officials have agreed, with varying views on the timing and number of rate cuts. Markets expect three cuts by the end of 2024, with the first possibly coming in June or July.
