Egg cartons are on display at grocery stores on February 10, 2025, with warnings that restrictions will be placed on purchases as they continue to affect the egg industry with avian flu.
Spencer Platt | Getty Images
According to updated market prices, following the awkward inflation report on Wednesday, there are no plans to cut Federal Reserve rates until at least September in all cases this year.
The futures market moved from another market, possibly by the end of the year, with the hopes of a cut in June, and with minimal chances of follow-up by the end of 2025, and not until autumn.
Comerica’s chief economist Bill Adams wrote that he wrote with an commentary that he resonated with others around Wall Street. “It will strengthen the Fed’s trends at least slowly in 2025, and perhaps even reducing the end rate.”
The Fed easing after the January Consumer Price Index report showed profits of 0.5% each month, pushing annual inflation to 3% and slightly lower than the January 2024 3.1% reading A decline in optimism occurred. Energy was even worse, with a 3.3% rate showing core inflation.
Fed Chair Jerome Powell appeared on Wednesday before the House Financial Services Committee, claiming that the central bank has made “great progress” on inflation from the peak of its cycle, but we’re still there plug. now. “
US Federal Reserve Chairman Jerome Powell testified on February 12, 2025 at Capitol Hill, Washington, DC, before the House Financial Services Committee on the six-annual monetary policy report to Congress.
Nathan Howard | Reuters
With the Fed targeting 2% inflation and the report shows no recent progress, it is easing further policies after central banks take full points from their 2024 benchmark short-term borrowing rates. I’m hoping.
It pointed out that the Fed’s futures trading is a 2.5% chance of a March cut. According to CME Group’s FedWatch gauge late Wednesday morning, there are only 13.2% in May, up to 22.8% in June, 41.2% in July and up to 55.9% in September. However, the probability is still rising in the air until October, when futures pricing means a 62.1% chance.
The chances of a second cut until the end of 2025 are just 31.3%, and prices do not show another cut until the second half of 2026. Currently, the Fed fund ratio is targeted in the range of 4.25% to 4.5%.
The issues raised in the CPI report did not occur on their own. Policymakers are also looking at the White House trade policy. President Donald Trump is pushing for aggressive tariffs that can complicate the Fed’s desire to raise prices and achieve that goal.
“This is a hot report and we don’t escape the sense that potential tariffs take upward risks due to inflation. The future,” said James Knightley, ING’s chief international economist.
The Fed is paying attention to CPI and other similar pricing measures, but its preferred inflation calculation is the Personal Consumption Expense Price Index, which the Bureau of Economic Analysis will release in late February. CPI Filter to PCE Reading Elements and Citigroup said it is expected that core PCE will fall to 2.6% in January.
