Views for next Fed rate cut pushed back after hot inflation report
CNBC: Wholesale inflation data suggests the Federal Reserve may not cut interest rates this year due to rising prices.
Construction work at the Marriner S. Eccles Federal Reserve building in Washington, DC continues as traders consider the possibility of no interest rate cuts in 2026. The producer price index saw a significant increase, leading to futures markets ruling out any rate cuts until December. The Fed is expected to hold rates due to elevated inflation caused by various factors, including tariffs and the Iraq war. Despite some dissenting views, the central bank may signal a stance of keeping rates steady for a longer period. Traders’ expectations for rate cuts in June, July, and September have decreased, with December still showing a possibility of a reduction. Fed funds futures indicate a lower rate by the end of 2026, although market volatility could result in a shift towards easing if the labor market weakens. Fed Governors Stephen Miran and Christopher Waller have advocated for immediate cuts, but the majority of the committee seems inclined to wait for further economic clarity.
