March 14, 2025

(THE FED MAY PUT RATES ON HOLD THIS YEAR)

March 14, 2025

Hello everyone

Good inflation reports mean lower rates, right? The Fed may not see it that way.

Inflation reports, which showed better-than-expected slowdowns in consumer and wholesale prices last month, may be hiding an unpleasant surprise. Progress on the Fed’s favourite indicator has possibly stalled.

Bank of America economists said the monthly increase in core Personal Consumption Expenditure (PCE) may have picked slightly up to 0.4% in February, with the year-over-year changes also picking up slightly.

Economists Jeseo Park and Stephen Juneau from Bank of America have indicated to clients that their forecast for PCE inflation reinforces their view that inflation is “unlikely to fall enough for the Fed to cut this year, especially given policy changes that boost inflation.” Furthermore, they expressed the view that they expect “policy rates to stay on hold through year-end unless activity data really weakens.”

The Federal Reserve meets next Wednesday to decide on interest rates.

In contrast to BofA’s views on the economy, Comerica (CMA) expects that the PCE report will be benign for markets but added that the outlook for inflation now depends on tariffs, deportations, and the Department of Government Efficiency (DOGE)

Today’s benign PPI report wasn’t enough to support stocks after President Trump said he’d impose 200% tariffs on alcohol imported from the EU, escalating the trade war.

QI CORNER

Recording of February 2025 Jacquie’s Post Zoom Meeting

https://www.madhedgefundtrader.com/jacquie-munro-meeting-replay-february-2025/

(I have included the link here in case any of you could not open the recording I sent out last week).

Cheers

Jacquie

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