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Investing.com – Days ahead of the Fed’s much-anticipated decision, US producer price index data, which missed market expectations, has now been released, giving an overview of interest rates ahead.
The decline in the producer price index, which is no less important than the inflation index, by more than experts’ expectations, paves the way for an upcoming decline, and thus more calm in the coming period.
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Producer price index and retail sales data
It increased by 6.2% in December, and experts expected it to rise by only 6.8%, which is contrary to experts’ expectations, after it recorded a rise of 7.3% in November.
While in December it recorded a decrease of about 0.5%, while experts expected a decrease of only 0.1%, after recording a rise of 0.3% in November.
While it recorded a decline of 1.1% on a monthly basis in December, experts had expected a decrease of only 0.8%.
The producer price index determines the rate of inflation (i.e. the rate of change in prices) experienced by manufacturers when they purchase goods and services. When manufacturers pay more money for goods and services, higher costs are more likely to be passed on to the consumer, and therefore the producer price index is believed to be a leading indicator of consumer inflation. The Producer Price Index is taken into consideration to a great extent, and when it peaks, its impact on the market is equal to that of the Consumer Price Index.
Reduce interest in one case
The economists of the American investment bank Morgan Stanley (NYSE:) stated that US inflation is likely to decline to 3% by the end of this year, and inflation may reach 2% by the end of 2024, and analysts believe that the US Federal Bank will not start reducing until the United States reaches to an inflation rate of 3%.
It is noteworthy in this regard that the CEO of Morgan Stanley, James Gorman, had said earlier that the next step for a bank might be to raise the interest rate by 25 basis points; After that, the US Federal Reserve will stop raising interest rates for a temporary period. Note that it is not certain to say that the Fed will intend to cut interest rates this year or not.
The Fed has not yet won
A member of Tom Parkin, on Tuesday evening, expressed his aspirations regarding the US economy exceeding the peak of inflation, adding that the consumer price index, on average, is still very high compared to what is expected, and the US Federal Reserve member also indicated that it cannot be said that the US Federal Reserve has won its battle to combat High inflation.
He added: I do not prefer to retreat from the cycle of monetary tightening at the present time. It is better if US inflation heads towards the 2% target convincingly. As the final rate of interest depends on the path of inflation.
Dollar and gold now
The dollar turned declining after it started the morning trading on the rise, as it was affected by the data that supports the Fed’s calming down the next stage, which negatively affects the strength of the dollar.
It has now decreased by 0.5%, recording 101.6 points.
And gold consolidated its gains after it turned upward, as it suffered noticeable losses in the beginning of the day’s trading, but it has now compensated for it, and is rising by a rate close to 0.6%.
It has now risen by 0.5%, to $1,918 an ounce.
And it rose by 0.55%, recording 1921 dollars an ounce.
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