It is a daily ritual for millions of Australians, but if you have noticed the price of your morning flat white or soy latte increase, brace yourself — it is likely to get worse.
By the end of the year,...
It is a daily ritual for millions of Australians, but if you have noticed the price of your morning flat white or soy latte increase, brace yourself — it is likely to get worse.
By the end of the year,...
The Federal Reserve (Fed) is monitoring inflation and using core PCE inflation as a key indicator. Despite a recent decline in inflation, core PCE inflation remains slightly above the Fed's target of 2%. The Fed's goal is to keep inflation around this level to maintain price stability. While inflation has shown no signs of returning to target, the Fed is cautiously optimistic that its current policy can address risks and support economic growth by adjusting interest rates as needed.
Mohamed El-Erian, an economic expert, criticizes the Federal Reserve for relying too much on data, leading them to deviate from their strategy. He suggests a more long-term approach and potentially adjusting the inflation target closer to 3%. Recent statements from Fed policymakers indicate a potential shift towards this conservative stance.
One Federal Reserve official warns that interest rates may need to rise instead of being cut to control inflation. Despite progress in lowering inflation, risks remain high due to supply chain issues, geopolitical factors, government spending, and a tight labor market. The official emphasizes caution in easing policy too soon as it could lead to a resurgence of inflation.
The Federal Reserve hinted at possible rate cuts this year, leading to a decline in Treasury yields. However, the Fed will monitor data and adjust if inflation persists or the labor market weakens. The 10-year Treasury yield is stable but could drop in the future. For now, investors see the 5-7 year Treasury bonds as offering attractive yields due to expected inflation moderation and rate cuts. The fixed income market is anticipated to remain stable.
The Federal Reserve is expected to lower interest rates by 0.75% to 1% in 2024. This is despite recent high inflation data, and strategists believe the Fed will prevent a recession and achieve a "soft landing" as it adjusts interest rates.
Inflation remains persistent, with key indicators above expectations. Core CPI rose 0.4% monthly and 3.8% annually, driven by energy and shelter costs. Despite some price declines, such as medical care, inflation remains above the Fed's 2% target. The Fed may delay lowering interest rates until it achieves greater confidence in inflation's decline. Strong job growth and consumer spending, while positive for the economy, also raise concerns about inflation's resilience.
