Will the US Federal Reserve cut interest rates? Notable activity in the stock market
Newly released core inflation data in the US has created expectations among investors that the US Federal Reserve (Fed) will cut interest rates.
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12punto FOREIGN NEWS
Investors began positioning themselves on Wednesday (January 15) based on the expectation that the Fed could cut interest rates several times this year. This activity in the US stock market followed the latest economic data released by the government.
The inflation report released by the US government helped to ease fears that inflation was accelerating in the final month of Joe Biden's presidency.
The 'core consumer price index,' which excludes food and energy prices and is seen as one of the key indicators of inflation, rose 0.2% in December compared to the previous month, according to the Department of Labor report. Economists had projected a 0.3% increase.
It is suggested that Donald Trump, who will take the presidential seat in the US, may experience disagreements with the Fed administration. According to reports in the US press, Trump's team has begun pressuring some bureaucrats in various positions to leave their posts
INVESTORS HAVE BEGUN PRICING IN AN INTEREST RATE CUT
According to Reuters, futures investors previously thought the Fed would wait until June to make its first interest rate cut. However, following the latest data, nearly half of investors have begun pricing in the possibility of an interest rate cut before June.
Before the data was released, almost all investors in the same group were pricing in the possibility of only a single interest rate cut this year.
BMO senior economist Sal Guatieri wrote in a statement on his X account, 'The Fed still has more work to do to fight inflation.'
According to Guatieri, the report allowed Fed officials to 'catch their breath' before new US President Donald Trump takes office.