Odaily News Analysts at JPMorgan Chase said there is little chance the Federal Reserve will cut interest rates when it kicks off its May policy meeting this week, and the likelihood of a rate cut at subsequent meetings is also low. Fed officials are constrained on monetary policy for a number of reasons, including:
1. Inflation expectations are rising. JPMorgan Chase said the inflation outlook is one of the reasons why the Fed will not cut interest rates at this time. The latest consumer inflation report showed that inflation in March rose 2.4% year-on-year, higher than the Fed's 2% target. Compared with what may happen in the future, this figure is still quite low: the one-year inflation forecast compiled by the University of Michigan is 6.5%.
2. The data has not yet shown the need for rate cuts, and although soft data such as future inflation expectations may eventually cause problems for investors, at least for now, the encouraging hard data mask this problem. The latest macroeconomic data continues to be strong and even relatively strong in some aspects. Last Friday's unexpectedly positive April non-farm payrolls report boosted investor confidence and drove the stock market higher. (Jinshi)