Expectations Review: Fewer Rate Cuts on the Horizon?

After three higher-than-expected CPI indices, investors recalibrated their expectations for rate cuts, projecting fewer reductions. Originally, up to three cuts were expected before the end of the year and the cuts were to begin in July. However, following the 0.4% monthly increase in the March CPI, only one or two adjustments are now anticipated, with the first possibly in September. Meanwhile, producer price data proved less worrisome, and had little impact on market valuations. Fed officials signaled that they are not in a hurry to alter monetary policy. The next important inflation indicator is the core PCE index on April 26.

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