Wall Street adjusts Fed rate cut timelines

“Recent
developments
–
namely,
upside
inflation
prints,
solid
labor
market
data,
and
easing
financial
conditions
–
have
clearly
diminished
the
case
for
commencing
rate
cuts,”
Matthew
Luzzetti,
chief
US
economist
at
Deutsche
Bank,
said
in
a
note.

Luzzetti
and
his
team
had
previously
argued
that
easing
would
hinge
on
clear
signs
of

inflation
falling
in
key
gauges
like
the
core
personal
consumption
expenditures
(PCE)
price
index.
Deutsche
Bank
now
expects
the
PCE
price
index
to
hold
at
0.3%
in
March
and
April.

“If
these
data
are
realized,
it
is
unlikely
that
inflation
data
alone
would
justify
a
cut
at
the
July
meeting,”
their
economists
said.

Bank
of
America
forecasts
a
similar
inflation
trajectory. 

“This
will
make
a
cut
as
early
as
June
or
September
unlikely
absent
of
clear
signs
of
labor
market
deterioration,”
Michael
Gapen
said
Thursday.
“The
acceleration
of
inflation
this
year
makes
a
cut
before
December
challenging
in
our
view.”