Fed Sounding Board: Inflation Stronger Than Expected Three Times, Dreams of Rate Cuts Fade Away
Thursday's economic activity report was the latest wake-up call for investors and Fed policymakers, who have been holding their breath that the much-anticipated spike could allow interest rate cuts to officially begin this summer, according to a new article by “Fed megaphone” Nick Timiraos. The data showed U.S. inflation was more stubborn than expected for the third straight month after a perfect interruption in the second half of last year. Individual economic growth and price data by themselves can still significantly alter the Fed's outlook so far this year. But the cumulative impact of these consecutive these consecutive disappointing data has been significant. In particular, data surges have been consistently stronger than expected, with revisions to data surges rising in subsequent reports in recent months. This trend has prompted investors and Fed officials to reconsider the appropriateness of this year's rate cuts.
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