U.S. inflation saw a moderate increase in March to 2.7 percent after reaching 2.5 percent in February. The latest personal consumption expenditures (PCE) price index data reveals a 0.3 percent increase in March, the U.S. Department of Commerce’s Bureau of Economic Analysis said on Friday. Therefore, markets still anticipate an interest rate cut no sooner than September.
The PCE price index is one of the inflation measures that the Federal Reserve monitors for its 2 percent inflation target.
The central bank looks for monthly inflation readings of 0.2 percent on the long term, which it deems necessary to decrease inflation back to its target.
Markets expected an increase in inflation exceeding forecasts in March, particularly following the recent gross domestic product (GDP) report which revealed an increase in price pressure.
For now, most of the inflation seems to have appeared in the first two months of 2024.
Read: Eurozone lending stagnates in March, ECB rate stance deters borrowers, lenders
Experts now expect the Federal Reserve to keep interest rates unchanged next week. The central bank has kept interest rates at 5.25 to 5.50 percent since July 2023 and has raised its policy rate by 525 basis points since March 2022.
Markets first expected the first interest rate cut to occur in March then June and now September amidst resilient inflation and labor market data this year.
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