“Recent developments – namely, upside inflation prints, solid labor market data, and easing financial conditions – have clearly diminished the case for commencing rate cuts,” Matthew Luzzetti, chief US economist at Deutsche Bank, said in a note.
Luzzetti and his team had previously argued that easing would hinge on clear signs of inflation falling in key gauges like the core personal consumption expenditures (PCE) price index. Deutsche Bank now expects the PCE price index to hold at 0.3% in March and April.
“If these data are realized, it is unlikely that inflation data alone would justify a cut at the July meeting,” their economists said.
Bank of America forecasts a similar inflation trajectory.
“This will make a cut as early as June or September unlikely absent of clear signs of labor market deterioration,” Michael Gapen said Thursday. “The acceleration of inflation this year makes a cut before December challenging in our view.”
Source: mpamag.com