Rate Cut Expectations Scaled Back

"Central banks are reassessing policy amid rising inflation risks, with fears of stagflation growing as the conflict continues to disrupt global supply chains and economic stability."

"Several measures of inflation remain far enough above the central bank's 2% target that few expect Fed officials to cut interest rates anytime soon."

"Interest rate expectations changed after the conflict began. Earlier, markets expected two rate cuts from the Federal Reserve this year. Now, money markets are not pricing in any rate cuts."

"January's Producer Price Index (PPI) showed wholesale inflation remain sticky, after a similarly hot consumer inflation print for the month dented optimism for an interest rate cut."

"money markets again pushed out the timing of the Reserve Bank’s first interest rate cut to September next year – fearing that the policy agenda of US President-elect Donald Trump would prolong global inflation."

"A stronger-than-expected reading on inflation saw investors largely scale back bets that the Fed will cut interest rates by 50 basis points in September."

"Gold, traditionally seen as a hedge against inflation, registered losses in the local market after stronger-than-expected inflation data—dropping to its lowest level since May 2022—dampened expectations of a rate cut."

"However, recent stronger-than-expected inflation data, which hit its lowest level since May 2022, reduced the likelihood of a rate cut, impacting gold prices."

""Each time that's happened investors have ratcheted back expectations for interest rate cuts.""

"But recent reports on inflation have consistently been coming in worse than expected. That could force the Fed to say it will deliver fewer rate cuts this year."