The new rebound of the inflation in USA registered in March moved this Wednesday even further in Wall Street the hopes that the Reserva Federal (Fed) cut interest rates soon, turning stock markets red.
According to several analysts, the data from the Consumer Price Index (CPI) released this morning were higher than expected and, coupled with a strong employment report, reduce the chances that the first rate cut will be in June.
The head of macroeconomic research at AXA Investment Managers, David Pageindicated in a note that the Fed may need “more than two softer reports before gaining sufficient confidence” in controlling inflation and delayed its expectations of the first cut to July.
“Now, there are growing concerns that the recent spike in inflation is more sustainable and we are seeing that reality reflected in the reaction of both equities and bonds, which are selling off in response to today’s report.”said Bret KenwelleToro investor analyst.
A couple of hours before closing on the New York Stock Exchange, the main indicators suffered falls of more than 1%, with the Dow Jones Industrial Average losing more than 500 points.
After the CPI data was released, the yield on the 10-year Treasury bond jumped and touched 5%, contributing to sales in the stock market, although mid-session it moderated its advance to 4.5%.
The inflation rate in the US rose again in March and did so by three tenths, to 3.5%, a rise that confirms the Fed’s view that it will not be easy to bring it to the 2% goal.
This is the second consecutive year-on-year increase in prices after they rose by one tenth in February, a situation that confirms the Fed president’s warning. Jerome Powellthat it will be difficult to lower inflation in a sustained manner.
After the eleven increases made since March 2022, the Fed has maintained interest rates since July of last year in a range of between 5.25% and 5.5%, its highest level since 2001.
Some analysts also warned of the repercussions of monetary policy beyond the United States, with a possible “dilemma for the European Central Bank«.
A BE cut prior to the Fed “could be counterproductive, since a depreciated euro would increase the price of imported goods, generating more inflationary pressure, he indicated in a note Pablo Duartesenior analyst Flossbach von Storch Research Institute. EFE (I)
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