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The egg cards are shown in a edible store with a warning that the limits will be placed in purchases as the avian flu continues to affect the egg industry on February 10, 2025 in New York City.
Spencer Platt | Getty images
An interest rate cut of the Federal Reserve will not reach up to at least September, if this year, after a disturbing inflation report on Wednesday, according to updated market prices.
Future markets changed the expectation of a June cut and possibly another before the end of the year to any movement until the fall, with a minimal possibility of follow -up before the end of 2025.
“The Fed will see the impression of hot inflation in January as confirmation that price pressures continue to bubb Street. “That will reinforce the inclination of the Fed to at least slow and possibly even the cuts of the final rate in 2025.”
The reduced optimism for the ease of food occurred after January Consumer Price Index report It showed a monthly gain of 0.5%, which carries the annual inflation rate at 3%, a taller touch than in December and only slightly lower than the 3.1%reading in January 2024. Excluding food and energy, the News was even worse, with a rate of 3.3% that showed central inflation, which the Fed tends to trust more, also increasing and maintaining well above the objective of the Central Bank.
Fed chair Jerome PowellIn an appearance on Wednesday before the Financial Services Committee of the House of Representatives, he insisted that the Central Bank had made “great progress” in the inflation of its peak of the cycle “, but we are not there yet. Therefore, we want Maintain the restrictive policy for now. “
The president of the United States Federal Reserve, Jerome Powell, testifies to an audience of the Chamber’s Financial Services Committee on “The Semiannual Monetary Policy Report to Congress”, in Capitol Hill in Washington, DC, USA. , February 12, 2025.
Nathan Howard | Reuters
As the Fed points to 2% of inflation and the report showed no recent progress, it also mitigated that the Central Bank see a greater policy that is applied as appropriate after it raised a complete percentage point in its short -term loan rate reference in 2024.
The futures trade of the Fed funds pointed to only a 2.5% possibilities of a March cut; Only 13.2% in May, to 22.8% in June, then 41.2% in July and finally to 55.9% in September, according to the CME Group Fedwatch Last minibre of Wednesday morning. However, that would leave the probability even in the air until October, when the price of futures contracts implies a 62.1%probability.
The probabilities of a second cut at the end of 2025 were only 31.3%, and the price does not indicate another reduction until the end of 2026. The FED fund rate is currently directed in a range between 4.25%-4.5%.
The problems raised in the IPC report are not occurring in isolation. Policy formulators are also seeing the white house commercial policy, with the president Donald Trump Pushing aggressive rates That could also increase prices and complicate the desire of the Fed to reach its goal.
“You cannot move away from the fact that this is a hot report and with the feeling that potential tariff Rates in the almost future, “said James Knightley, International Economist Chief of ING.
Although the FED pays attention to the CPI and other similar prices measures, its preferred inflation meter is the Personal Consumer Expenses Price Index, which the Office of Economic Analysis will launch later in February. The Elements of the CPI filter in the PCE reading, and Citigroup said that it hopes to see that the central PCE falls to 2.6% for January, a decrease of 0.2 percentage points from December.
