Chairman Powell along with other Fed officials has been conveying a unified narrative, that inflation is “not far” from where it needs to be for the central bank to pivot from a restrictive policy to its first rate cut. Today’s jobs report reinforces and strengthens the likelihood of the first rate cut by the Federal Reserve by June of this year.
According to the CME’s FedWatch tool, the probability that the Federal Reserve will maintain its current interest rate in March is 97%, and 70.5% in May. However, the probability of the first rate cut in June is exceedingly high, currently at 71.5%. The dollar traded to a low of 102.30 and is currently fixed at 102.69 after factoring in today’s fractional decline of 0.08%.
According to MorningStar, “The Consumer Price Index report for February 2023 is expected to show inflation heating up again, thanks to an uptick in gasoline prices. But even excluding higher costs at the pump, the report is expected to show that upward pressure on prices is remaining stickier than Federal Reserve officials may want.”