Rising CPI and Other Inflationary Concerns Could Push Interest Rates Higher

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4% in March on a seasonally adjusted basis according to the U.S. Bureau of Labor Statistics’ (BLS) latest news release. The all-items index increased to 3.5% before seasonal adjustment, reversing for the second consecutive month the lowering of inflation in January 2024 to 3.1% from 3.4% in December 2023. In addition to what seems to be inflation’s somewhat roller coaster path, several longer-term inflationary concerns could push interest rates higher according to JPMorgan Chase CEO Jamie Dimon. The Federal Reserve’s 2% target for inflation is proving elusive and even if their goal is reached, increased “military spending as global conflicts intensify, the fiscal spending needed to transition to a green economy, and rising healthcare costs” adds uncertainty about the Fed starting to lower borrowing costs. According to CME’s FedWatch tool, “the market is pricing in a 51% chance” of June bringing the first rate cut, even though “the probability of a cut by July is slipping — currently at 70%, down from 92% a month ago.”

Source:    https://www.barrons.com/articles/what-to-know-today-37f30f22

Source:    https://www.bls.gov/bls/newsrels.htm#NEWS