Bank of America expects an interest rate cut in June by the Federal Open Market Committee.
The Consumer Price Index report released last Tuesday reinforces the Fed's concerns that core services inflation will remain stable due to the tight labor market.
After the release of these data, a rate cut in March is not on the table, and the chances of a cut in May have significantly decreased.
But we remain comfortable with our call to start cutting interest rates in June.
While the risks are now clearly leaning towards a delay, there will be four more CPI readings before the June decision, leaving plenty of time to re-establish the narrative of low inflation if the January inflation data proves to be just a passing picture instead. From the beginning of a new trend.
The focus returns again to the US data today, where we are waiting for the retail sales reading, which is considered to be the main event for the markets today.
