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Monday, March 18, 2024 6:09:05 PM
Inflation Projection No Rate Cut Soon
By: Almanac Trader | March 18, 2024
Until PCE is sustained at or below 2% they are not likely to cut. Our PCE projection chart reveals the Fed is not likely to be in a rush. They are slow to cut rates & only move quickly when a real crisis is at hand, which currently is not.
The Street is overly optimistic the Fed will cut rates sooner, substantially, & start well before the election to not appear political. But last week’s higher than expected CPI (0.4% monthly 3.2% yearly) suggests otherwise as PCE tends to follow CPI’s trend.
Headline PCE index, including food and energy “is the Federal Reserve’s preferred measure of inflation.” https://fred.stlouisfed.org/series/PCEPI
PCE’s monthly change was 0.3%, which put the 12-month rate at 2.4%, above the Fed’s stated 2% target. Anything above a 0.1% monthly change will keep inflation above 2%. Any monthly change greater than 0.1% is likely to delay any Fed rate cut until after midyear if not longer.
The Fed may have engineered the goldilocks soft landing, but with inflation persistent while the economy remains resilient and unemployment stays down, there’s no need for the Fed to rush to cut rates.
Read Full Story »»»
DiscoverGold
By: Almanac Trader | March 18, 2024
Until PCE is sustained at or below 2% they are not likely to cut. Our PCE projection chart reveals the Fed is not likely to be in a rush. They are slow to cut rates & only move quickly when a real crisis is at hand, which currently is not.
The Street is overly optimistic the Fed will cut rates sooner, substantially, & start well before the election to not appear political. But last week’s higher than expected CPI (0.4% monthly 3.2% yearly) suggests otherwise as PCE tends to follow CPI’s trend.
Headline PCE index, including food and energy “is the Federal Reserve’s preferred measure of inflation.” https://fred.stlouisfed.org/series/PCEPI
PCE’s monthly change was 0.3%, which put the 12-month rate at 2.4%, above the Fed’s stated 2% target. Anything above a 0.1% monthly change will keep inflation above 2%. Any monthly change greater than 0.1% is likely to delay any Fed rate cut until after midyear if not longer.
The Fed may have engineered the goldilocks soft landing, but with inflation persistent while the economy remains resilient and unemployment stays down, there’s no need for the Fed to rush to cut rates.
Read Full Story »»»
DiscoverGold
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Caveat emptor!
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