Higher inflation than expected in March confirms earlier concerns about its persistence. The markets have lowered expectations for Federal Reserve rate cuts to two this year (instead of three), with the first now expected in September rather than June. The report showed all-items and core inflation above the Fed's 2% target, with services prices rising significantly. This lackluster news contributed to a sell-off in the markets. There remains a possibility that no rate cuts occur this year due to the rising inflation.
Turkey's inflation rate rose to 68.5% in March, driven by education, communication, and hospitality sectors.
Despite recent rate hikes, economists predict further tightening is needed to curb rising prices.
The opposition party's success in local elections suggests that the public is concerned about inflation, which may have factored into the decision to raise rates.
Since 1963, home prices have risen 24 times more than inflation, resulting in a shortage of affordable housing. The median home price in the U.S. is now around $412,778, while inflation has increased by only 10 times during the same period. The high demand for housing, coupled with slow construction times and zoning restrictions, has contributed to this price increase.
Federal Reserve Chair Jerome Powell has hinted at the possibility of lowering interest rates in the near future if inflation continues to ease. The Fed is nearing confidence that inflation is approaching their 2% target, and will consider rate cuts to prevent an economic downturn. Market expectations indicate the first cut may occur in June, with a total of 4 cuts anticipated by the end of 2024. However, Powell emphasized that the current policy stance remains appropriate until stronger indications of inflation decline are observed.
