- Nepal's 'Everest Man' claims record 29th summit
- Star duos lead Celtics, Mavs to NBA playoff victories
- Boeing's problems rattle US aviation regulator as well
- Indonesia school bus crash kills 11, dozens injured
- Suarez on target as Miami fight back in Montreal
- Cannes film fest returns with comebacks, strikes, Trump and MeToo
- Concern about Russia dominates as Lithuanians vote
- Israeli fans slam Eurovision snub as 'political'
- New York gears up for major Spring auctions after soft 2023
- Nemo's hometown celebrates Eurovision win for Switzerland
- Koepka seeks back-to-back major wins for third time at PGA
- Finding Nemo: Eurovision winner's journey of self-discovery
- Switzerland's Nemo wins Eurovision Song Contest
- Sagstrom holds on to lead as Korda fades at Founders Cup
- McIlroy surges into contention at Quail Hollow
- Irving, Doncic lead Mavs over Thunder
- Palou powers to IndyCar Grand Prix victory
- Tens of thousands rally in Tbilisi against 'foreign influence' bill
- Bologna on brink of Champions League with Napoli win
- In Tel Aviv, Eurovision fans hope world shows Israel some love
- Ogier storms towards Rally of Portugal record
- Swedish police push back protesters outside Eurovision arena
- Ireland's Eurovision entry accuses Israeli broadcaster of rule break
- 'Many game-changers' as Kolkata book IPL play-off berth
- Rescue operations continue in flooded southern Brazil despite new rain
- Emotional Edwards in tears with Luton on brink of relegation
- Nadal eyes French Open despite Rome exit as Djokovic laughs off bottle drama
- Kolkata down Mumbai to confirm IPL play-off berth
- Russia claims gains in Ukraine's Kharkiv region
- Mainz crush Dortmund to edge to safety, Cologne stun Union Berlin
- Swaggering champions Madrid rout relegated Granada
- 'Miracle' survivor found 5 days after S.Africa building collapse
- Thousands rally in Tbilisi against 'foreign influence' bill
- Kane to miss Bayern's last home game with back injury
- Hundreds protest outside German Tesla factory
- 'Fine' Djokovic dons cycling crash helmet after Rome bottle drama
- Al Hilal keep Ronaldo trophy-less in rich Saudi league
- Thousands rally in Tbilisi against 'foreign influence' bill: AFP
- 'They drowned together': Lives swept away by Afghanistan floods
- Ireland's Eurovision entry shares cryptic post ahead of final
- Burnley relegated from Premier League after loss at Spurs
- In Nigeria, Prince Harry promotes Invictus Games for veterans
- Man City close in on Premier League title, Burnley relegated
- Cologne great escape still on after stunning comeback
- Brazil's catastrophic weather spawns spate of conspiracy theories
- Man City have title 'destiny' in our hands: Guardiola
- Pogacar wins again on Giro d'Italia mountain
- Madrid eagerly awaits Mbappe after PSG exit confirmed
- Russia claims gains in ground offensive in Ukraine's Kharkiv region
- 'England great' Anderson will make last Test appearance in West Indies clash
US Fed to meet amid dwindling hopes of summer rate cuts
The US Federal Reserve is highly likely to keep interest rates unchanged later this week, as policymakers contend with a recent uptick in inflation that has sharply cut the chance of a summer start to interest rate cuts.
The Fed's decision to hike interest rates and then hold them at a 23-year high has helped to significantly lower elevated inflation, although it remains stuck firmly above the US central bank's long-term target of two percent.
Since the start of this year, the Fed's favored inflation measure has actually accelerated, hitting an annual rate of 2.7 percent in March, while economic growth has slowed, and the labor market has remained robust.
The current environment, analysts say, is likely to lead the rate-setting Federal Open Market Committee (FOMC) to hold rates at their current level of between 5.25 and 5.50 percent for longer than previously thought.
"Another round of elevated inflation data is likely to lead to a more hawkish-leaning message at the May FOMC meeting," economists at Deutsche Bank wrote in a recent note to clients.
- Dialing back expectations -
At the most recent FOMC meeting in March, policymakers penciled in three quarter percentage-point rate cuts this year, although Fed Chair Jerome Powell also warned that inflation was "still too high."
The data since the March 20 decision has only reinforced that message, pushing policymakers -- including Powell -- to dial back their optimism over rate cuts.
Fed Governor Christopher Waller told a conference in New York last month that it is "appropriate to reduce the overall number of rate cuts or push them further into the future in response to the recent data."
Richmond Fed President Tom Barkin, who is a voting member of the FOMC this year, told AFP earlier this month that the recent inflation data had not been "supportive" of the case for cuts.
And in mid-April, Powell said the recent data "have clearly not given us greater confidence, and instead indicate that it's likely to take longer than expected to achieve that confidence."
The markets are almost certain that the Fed will leave its key lending rate unchanged this week: Futures traders assigned a probability of less than three percent on Friday that it would announce a rate cut after its two-day meeting concludes on Wednesday, according to CME Group data.
In light of the recent data, traders do not see a greater-than-50-percent chance of an interest rate cut until the Fed's decision mid-September, according to CME Group.
A September cut could prove awkward for the Fed as the independent US central bank, since it would come shortly before the November presidential election, which will likely see the Democrat incumbent Joe Biden face former Republican president Donald Trump.
Analysts are deeply divided on both the size and timing of rate cuts this year, with estimates by leading economists ranging from zero cuts in 2024 to as many as four.
"Stubborn inflation and resilient economic activity through the first few months of the year have left the FOMC little reason to ease policy in the near term," Wells Fargo economists wrote in a recent note to clients.
- Time for easing? -
The Fed is not publishing updated economic forecasts this week, and so analysts will instead have to parse FOMC policymakers' public comments in the coming weeks for signs of their thinking on interest rate cuts.
But it could provide some clarity on Wednesday about its policy allowing assets it purchased to help the US economy weather the Covid-19 pandemic "run off" -- or expire without being replaced.
This ongoing policy reduces the overall size of its balance sheet and is also meant to tighten monetary policy somewhat.
The Fed, which currently holds around $7.4 trillion in assets, is currently debating when to start slowing down the current pace of runoff, which allows up to $95 billion in assets to mature each month without being replaced.
It will likely be appropriate to slow the pace of runoff "fairly soon," Fed chair Powell said last month, adding that this would reduce the risk of "liquidity problems" -- a likely reference to last year's banking crisis.
Analysts broadly expect an announcement to come either this week or at the next interest rate meeting in June.
M.Odermatt--BTB