Expectations for a June interest rate cut by the Federal Reserve are beginning to fade, as markets now anticipate the central bank may delay rate reductions until later in the year amid persistently hot inflation data. One person who is sticking with June is Citi Global Economist Rob Sockin.
Sockin acknowledges that the timing of a potential Fed rate cut is a "close-call," noting that the recent inflation data "has come in a lot stronger than expected." He explains that with economic activity continuing to show robust momentum, markets have pushed out their expectations for when the central bank may begin an easing cycle.
However, Sockin still believes there will be "enough evidence" that inflation is moderating for the Fed to start cutting rates in June. However, he points out that sectors like services inflation remain "very sticky" globally, forcing central banks worldwide to adopt a more cautious stance as they "worry that the services side of the inflation might be longer lived than they had originally thought."
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