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Inflation into consideration as the Fed is expected to hold on prices



<p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "its third monetary policy decision in 2019. With a new GDP printing showing another low reading on inflation, the Fed is expected to keep the reference price stable in today's target range of 2.25% to 2.50%. " data-response time = "15"> Wednesday, the Federal Reserve will make its third monetary policy decision in 2019. With a new GDP print showing another low reading on inflation, the Fed is expected to keep the benchmark price stable at today's target range from 2.25% to 2.50%.

<p class = "canvas-atom canvas text Mb (1

.0em) Mb (0) – sm mt (0.8em) – sm" type = "text" content = "In March, data-dependent Fed did not signal more interest rate hikes for the year among the tight economic conditions and geopolitical concerns abroad, since then, the data has shown that the economy is merging as expected, with a robust March job report and shaking concern over a weak February 19459003, and a GDP print that had a US economy growing data-response time = "16"> In March, the data-dependent Fed did not signal more interest rate hikes for the year among the tight economic conditions and geopolitical concerns overseas, and since then the data has shown that the economy is merging as expected, with a robust March job report (shaken by concern over a weak February) and a GDP print that had a US economy that grew to an estimate of 3.2% in the first quarter.

<p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The top-line number easily cleared expectations for growth of 2.3%, powered by higher private investment investments net exports and government and local expenses. "data-response time =" 17 "> The top-line number easily removed expectations of 2.3% growth, driven by higher private investment, net exports and government and local government expenditure.

<p class =" canvas -text Mb (1.0em) Mb ( 0) – sm Mt (0.8em) – sm "type =" text "content =" But some concerns over an overheating economy were tempered by low readings on inflation, the Fed favored inflation rate, growing disappointingly 1.3%. The Fed has persistently underestimated its 2% inflation target & nbsp; and has mentioned weak inflationary pressures as a reason to pause interest rate increases for the time being. "data-reactid =" 18 "> But some concerns over an overheating economy were tempered by low readings on inflation; the core index of personal spending, the Fed's preferred inflation measurement, grew disappointingly 1.3%. The Fed has persistently underestimated its 2% inflation target and has cited cheating inflationary pressures as a reason to pause interest rate hikes currently.

From Friday afternoon, food fund futures markets were pricing in a 97.5% chance that the Fed holding rate would be stable in May 1, with only 2.5% chance of the Fed cut rates.

High Frequency Economics & # 39; Jim O & # 39; Sullivan wrote on Friday that "the core inflation movement is in the wrong direction from Fed officials' perspective and adds that the Fed should remain "on hold" as a result of the GDP figure.

JPMorgan's Michael Feroli said that the solid GDP reading will cause the Fed to dive its march of the economy as having "reduced from its solid interest rate." Feroli said inflation would be the main point of "weak" spending.

<h2 class = "canvas-atomic text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " Longer-t Erm challenges "data-response time =" 22 "> Long-term challenges

In addition to concerns over consumption, the GDP report also confirmed sustained growth in fixed investment, a major driver of economic growth.

FILE – In this March 20, 2019, the file of the Federal Reserve Chair Jerome Powell listens to a reporter's question during a press conference in Washington. (AP Photo / Susan Walsh, File)

For the first quarter of 2019, business investment increased by just 2.7% quarterly over the quarter. During the quarter 2018, the investment increased 5.4% and in the first quarter of 2018, investments had grown by 11.5%.

<p class = "canvas-textile textile Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Although the data is unlikely to change the Fed & # 39 ; tenor of household spending and business investment, the Fed can face production estimates, its March meeting politicians estimated 2.1% economic growth in 2019. Economists predicted that the US could not reach 3% growth and reached slower global growth and decreasing effect of Trump tax deduction. "data-reactid =" 36 "> Although the data is unlikely to change the Fed's tenor of household spending and business investment, the Fed can face up to production estimates. In the March meeting, policemen assumed economic growth in 2019 of 2.1%. Economists predicted that the United States would not be able to achieve 3% growth among the slower global growth, and the declining effect of the Trump tax system.

<p class = "canvas-textile Mb (1.0em) Mb (0) MUFG Union Bank Chris Rupkey wrote that Fed officials have" mud in their eye "to forecast such low growth, noting that the Fed is" Underplaying just how fast growth can be "in the face of 3.2% growth. He took the issue of Fed officials who had warned that could face the downside and justified their near 2% GDP growth forecasts. "data-reaction time =" 37 "> In a heated note Friday, MUFG Union Bank wrote Chris Rupkey that Fed officials have" mud in their eye "to forecast such low growth and note that the Fed is" underplaying how fast growth may be "meeting with 3.2% growth. He questioned the Fed officials who warned that they would face the downside and justify their forecasts of nearly 2% GDP.

"Fed officials, please stop scaring the audience with your statements, warning of" disadvantages, "writes Rupkey." There are no negative financial implications in today's GDP report and this good news will be heard of markets around the world. "

Ian Shepherdson, chief economist at the Pantheon Macroeconomics, wrote on Friday that if the second quarter's reading comes in the same way as hot," the Fed is going to have a difficult summer. "

If government spending, inventories and net exports can not give up next GDP report, it is possible that GDP figures may come down to provide output growth Fed will not release updated economic projections at the May 1 meeting, but Fed Chair Jerome Powell will meet reporter's questions at the press conference.


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