Rise in US inflation weakens hopes for interest rate cuts

• Published date: 11 April 2024
• Publication title: Irish Times (Dublin, Ireland)

The annual consumer price index (CPI) figure compared with expectations of a 3.4 per cent rise, according to economists polled by Bloomberg, while the core number was also greater than forecast

CPI had previously risen to 3.2 per cent in February from 3.1 per cent in January.

Bond yields jumped and stock futures sank after the data release.

Futures traders drastically lowered rate cut expectations, pricing in between one and two quarter-point cuts this year, compared with six or seven at the beginning of January.

Before the inflation figures were published, markets had expected between two and three cuts this year.

Traders had also previously seen a July cut as a near certainty, but reduced their bets on that timing from about 98 per cent to 58 per cent after yesterday’s report was released.

The two-year Treasury yield, which moves with interest-rate expectations, jumped by 0.19 percentage points to 4.9 per cent. S&P 500 futures fell 1.5 per cent.

Complicated task

...