U.S. core inflation remains stubbornly high, with February's Personal Consumption Expenditures (PCE) data expected to show a 0.4% month-over-month increase and a 2.8% year-over-year rise. Core PCE is projected at 3.0% year-over-year, well above the Federal Reserve's 2% target. Rising commodity prices and energy costs are key contributors to this inflationary pressure, alongside persistent "super core service inflation."
In response, the Federal Reserve is anticipated to maintain its interest rate range at 3.50%-3.75% during its April policy meeting, marking a third consecutive pause on rate cuts. Market sentiment has shifted, with over 97% of traders expecting no change in April, and a growing consensus that rate cuts will be delayed and less frequent than previously anticipated.
U.S. Core Inflation Stays High; Fed Likely to Hold Rates Steady
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