We expect the Federal Open Market Committee to keep its policy rate unchanged between a rate of 5.25% and 5.5% at its meeting next week. But we anticipate that the median rate forecast implied by the dot plot will indicate that the committee now expects two rate cuts this year, for a cumulative rate ... READ MORE >
Inflation
Global central bank policy pivot continues as ECB cuts rate
The European Central Bank reduced its policy rate by 25 basis points on Thursday which, following the 25 basis-point rate reduction by the Bank of Canada on Wednesday, represents the first in what we expect will be a series of rate cuts by the G7 central banks this year. The moves in Europe and Canada ... READ MORE >
Spending cools more than expected as Fed contemplates rate cuts
American consumers pulled back in April as a sign of elevated interest rates weighing further on overall demand as fiscal spending from the pandemic wanes. The material slowdown of the labor market in April was also a key factor with income growth essentially unchanged on an inflation-adjusted ... READ MORE >
GDP and inflation grew slower than earlier estimates
Softer overall demand and inflation in the first quarter should be more of a relief for the Federal Reserve and the market rather than a concern. Most of the downward revision to gross domestic product data released by the Commerce Department on Thursday came from consumer spending, partly because of ... READ MORE >
Global central bank outlook: Reducing rates to bolster growth
After two years of major central banks raising interest rates, the weighted global policy rate stands at a restrictive 7.2%. But with disinflation having taken hold around the world, it is time for central banks to reduce these rates. Usually, the Federal Reserve would lead the way. But with private ... READ MORE >
Consumer inflation expectations moderate in May
The University of Michigan reported on Friday that consumer sentiment and inflation expectations improved in the second half of May. This may be welcome news after the Federal Reserve seemed less sure about whether interest rates were sufficiently restrictive or not. The effect of high interest rates ... READ MORE >
U.S. new home sales miss forecasts amid rising mortgage rates
New home sales fell below estimates in April as mortgage rates surged to above 7%. The data, released by the Census Bureau on Thursday, pointed to a disappointing month for housing sales, following the drop in April’s existing home sales released on Wednesday. The rebound in inflation in the first ... READ MORE >
Canada’s inflation fell to 2.7%, bolstering case for June rate cut
Canada's consumer price index report for April offers a clear message for the Bank of Canada: A rate cut in June is a no brainer. Headline inflation fell to 2.7 per cent, within the 1 per cent to 3 per cent range for the fourth month in a row and the lowest since early 2021, a full year before this ... READ MORE >
Forecasts show softer April PCE inflation
Details from April’s consumer price index and producer price index reports this week implied a slightly softer month for the personal consumption expenditures index. We think the top-line PCE inflation will most likely come in at 0.25% for April, down from 0.30% in March, while the core index will slow ... READ MORE >
CPI resumes disinflationary trend in April amid weakened retail sales
The drop in April’s consumer price index was a much-needed step in the right direction in the Federal Reserve's effort to tame inflation and provided hope for potential rate cuts this year. Retail sales, in another key report released on Wednesday, indicated a much weaker April, explaining the extended ... READ MORE >