Friday's monthly personal consumption expenditures (PCE) report showed inflation increased in the month of February, which could affect the timing of future interest rate cuts by the Federal Reserve.
This is what the Federal Reserve Jerome Powell said Friday about the latest inflation data and what could come next.
What happened: The general PCE price index rose 2.5% annually in February, up from the 2.4% reported in January. The figure was in line with estimates.
Month over month, the PCE index rose 0.3%.
Personal spending in the report rose 0.8%, above estimates and higher than the 0.2% increase reported in January.
The underlying price index increased by 2.8% at an annual rate, also in line with estimates. This figure excludes food and energy prices, which are more volatile.
Powell said the report will not cause the Federal Reserve to rush to cut rates.
“We don't need to be in a hurry to cut,” Powell said Friday, as reported Bloomberg.
Powell said the recently reported inflation data is “in line with our expectations.”
Going forward, Powell said the Federal Reserve will cut rates when inflation is on track to reach the 2% target set by the financial governing body.
“It's nice to see something living up to expectations.”
Powell called the path to 2% inflation “a sometimes bumpy road” in his comments.
Related Link: Persistent Inflation Persists: Fed's Preferred Measure Rises, Analysts Speak Out
Whats Next: Estimates of rate cuts in 2024 by industry experts and analysts have been changing based on recent inflation data. Most experts predict three rate cuts in 2024.
One big question remains: whether the first rate cut will come in May, June or even later.
Crypto Prediction Market Polymarket offers betting on articles in categories such as politics, the Middle East, sports, cryptocurrencies, pop culture, business and science.
A prediction market for when the Federal Reserve's first rate cut will take place has attracted millions of dollars in bets.
In Polymarket, users deposit in Polygon MATIC wearing USDC USDC/USD and you can deposit with Ethereum ETH/USD or from crypto accounts.
Each betting market charges $1 for the winning option.
He market for “Fed Rate Cut in…? You have the following options as of Friday, with the percentage chance of the event occurring. The odds as they were before the Federal Reserve's March meeting They are in parentheses.
May 1: 9% (10%)
June 12: 63% (52%)
July 31: 81% (78%)
September 8: 86% (89%)
November 7: 92% (90%)
December 18: 92% (93%)
The latest inflation data has led to more cryptocurrency bettors betting on a rate cut before June 12, with 63% betting on this date. The percentage of people betting on a Federal Reserve cut before July 31 has also increased.
Based on feedback from economists and the crypto betting market, June is the heavy favorite for a first rate cut.
Read next: Federal Reserve Officials Confident Inflation Is Falling, But Want More Evidence Before Cutting Rates
Illustration of Jerome Powell and Wall Street. Photo: Federal Reserve/Flickr Photo: Bylolo/Unsplash.
