Powell hints at delaying interest rate cuts and inflation slowdown in the UK again, as the possibility of the Federal Reserve cutting interest rates in June receives another blow after Federal Reserve Chairman Jerome Powell stated that monetary policy should be more restrained for a longer period.
Speaking at a forum in Washington on Tuesday, Powell said, “It is clear that recent data have not given us greater confidence and instead suggest that it may take longer than expected to achieve that confidence.” He also said, “At present, given the strength of the labor market and progress in inflation so far, it is appropriate to allow monetary policy more time to work and allow data to guide us.” This opinion contradicts his statements before the Senate Committee, just over five weeks ago, where he said the Federal Reserve “is not far” from gaining confidence in the necessary inflation decline to lower interest rates.
Until recently, it was widely expected that the US central bank would begin a cycle of interest rate cuts in June, with two more cuts by the end of 2024. In the UK, consumer price inflation slowed to 3.2% on an annual basis in March, its weakest level in two and a half years, down from a 3.4% increase in February. “Once again, food prices were the main reason for this decline, as core inflation, which excludes energy, food, and tobacco prices, slowed to 4.2% from 4.5% in February.
This came after earlier data released earlier in the week showed a slowdown in core wage growth once again recording the weakest increase since September 2022. The Bank of England kept interest rates at their highest level since 2008 at its meeting last month, with Governor Andrew Bailey later stating that the UK economy is heading towards the point where the central bank can start cutting interest rates.
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Shady Fouad is a technical analyst at LDN Company
Shady's strategic vision in the currency markets is reinforced by more than fifteen years of trading experience, which enables him to blend economic and technical analyzes with high efficiency, and find the best investment ideas for traders.
