The news that core prices rose by a more modest 0.3% in March, even as higher energy prices drove headline inflation to a 40-year high of 8.5%, explains why investors pared bets this week on how far interest rates would rise. We still expect the Fed to deliver a series of 50bp rate hikes at its next three policy meetings. But weak GDP growth and a drop in core inflation to nearer 4% should persuade the Fed to revert to 25bp hikes from September onwards.
We are sending this Weekly one day earlier than usual because our offices are closed for Good Friday on Friday, 15th April.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services