Jul 28, 2022
In Fashion Forum
U.S. inflation rebounded in April, but not as sharply as expected. According to the current inflation data, the United States still has room to raise interest rates twice in 2017, but if inflation cannot continue to recover, the Fed's next plan to expand monetary policy tightening may be hindered. The U.S. Consumer Price Inflation (CPI) registered negative growth in March, and although the April data improved significantly, the improvement was less than expected (see chart). Headline CPI rose 2.2% in April, while core CPI excluding food and energy items rose 1.9%, both slightly below market expectations. AllianceBernstein believes that while popular database the inflation data is strong enough for the Federal Open Market Committee (FOMC) to raise its short-term policy rate in June, it will not be enough to support the possibility of the Fed expanding further monetary policy tightening in the future. . Still, AllianceBernstein expects the Fed to raise rates once in June and one by the end of the year. However, if the CPI fails to pick up in the next few months, AllianceBernstein will have to reassess the outlook for rate hikes in the second half of the year. The reason for the slowdown in headline U.S. inflation growth is simple; headline prices have followed the recent ups and downs of oil prices, and the recent decline in commodity prices means headline CPI is likely to fall further in the coming months. Because the overall CPI is closely linked to commodity prices, the Fed usually does not take this as a guide; instead, Fed officials prefer to observe core inflation, which is more stable and more likely to reflect the effect of monetary policy.