more concerned about the job market than inflation<\/a>, and cut rates by a quarter point for the first time this year last week. But a hotter-than-expected inflation report could derail plans for further cuts.<\/p>\nEconomists largely expect inflation to rise steadily this year as tariffs push up prices for imports, while inflation decelerates for other key prices including rent.<\/p>\n
“We expect the underlying inflation trend to keep falling but the cumulative tariff effect to grow, pushing the year-on-year rate a bit higher to a peak of 3.2% in December before it resumes its decline in 2026,” David Mericle, chief U.S. economist at Goldman Sachs, wrote in a commentary.\n<\/p>\n
For now, Core PCE inflation is still above the Fed’s goal of a 2% annual rate.\n<\/p>\n
“With inflation still above target, [Thursday’s] release likely argues against significant cuts to the policy rate in the coming months,” Richard Flax, Chief Investment Officer at Moneyfarm, wrote in a commentary.<\/p>\n
That point of view was echoed by at least one Fed policymaker Thursday.<\/p>\n
“My view is that inflation remains too high while the labor market, though cooling, still remains largely in balance,” Jeffrey Schmid, president of the Kansas City Fed, said at an event in Dallas according to prepared remarks. “I view the current stance of policy as only slightly restrictive, which I think is the right place to be.”\n<\/p>\n
As of late Thursday afternoon, financial markets were pricing in an 85.5% chance of a Fed rate cut in October, down from a 92% chance on Wednesday, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data.<\/p>\n
Financial markets could slip Friday if inflation comes in higher than expected. The prospect of lower interest rates, and lower borrowing costs, generally sends stock prices higher.<\/p>\n
“Markets want more concrete evidence that inflation is cooling,” Daniela Sabin Hathorn, senior market analyst at Capital.com, wrote in a commentary. If inflation is higher than expected, she added, stocks could take a hit.<\/p>\n","protected":false},"excerpt":{"rendered":"Key Takeaways A key inflation report due Friday has gained new significance after a string of economic data…\n","protected":false},"author":2,"featured_media":43832,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":["post-43831","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/43831","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=43831"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/43831\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/43832"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=43831"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=43831"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=43831"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}