- A Fed interest rate cut won’t be coming until at least September, if at all this year, following a troubling inflation report Wednesday.
- Chair Jerome Powell, in an appearance before the House Financial Services Committee, insisted the Fed had made “great progress” on inflation from its cycle peak “but we’re not quite there yet.”
A Federal Reserve interest rate cut won’t be coming until at least September, if at all this year, following a troubling inflation report Wednesday, according to updated market pricing.
Futures markets shifted from the expectation of a June cut and possibly another before the end of the year to no moves until the fall, with a minimal chance of a follow-up before the end of 2025.
“The Fed will see January’s hot inflation print as confirmation that price pressures continue to bubble beneath the economy’s surface,” Bill Adams, chief economist at Comerica, wrote in commentary that echoed others around Wall Street. “That will reinforce the Fed’s inclination to at least slow and possibly even end rate cuts in 2025.”
Reduced optimism for Fed easing came after the January consumer price index report showed a 0.5% monthly gain, pushing the annual inflation rate to 3%, a touch higher than December and only slightly lower than the 3.1% reading in January 2024. Excluding food and energy, the news was even worse, with a 3.3% rate that showed core inflation, which the Fed tends to rely on more, also rising and holding well above the central bank’s goal.
Fed Chair Jerome Powell, in an appearance Wednesday before the House Financial Services Committee, insisted the central bank had made “great progress” on inflation from its cycle peak “but we’re not quite there yet. So we want to keep policy restrictive for now.”
Source: https://www.cnbc.com/2025/02/12/hopes-for-more-fed-rate-cuts-dim-as-powell-notes-hot-cpi-means-were-not-quite-there-yet.html