Economist: Fed May Struggle to Cut Rates This Year

Odaily According to economists, the sudden surge in gasoline prices felt by American consumers will be fully reflected in the key inflation data to be released this week. It is expected that the US CPI for March will increase by 1% month-on-month, marking the largest single-month rise since 2022; the core CPI may rise by 0.3% month-on-month. Previously, the war in Iran pushed up gasoline prices at US gas stations by about $1 per gallon. A day before the CPI data release, the Fed's preferred inflation gauge will provide information on pre-war price pressures. Economists anticipate that the core PCE price index may have increased by 0.4% for the third consecutive month in February, indicating that even before the conflict erupted, the process of inflation cooling to more moderate levels had already stalled. Combined with signs of stabilization in the US labor market, persistent price pressures, and new inflation risks arising from the Middle East conflict, this helps explain why the Fed may struggle to lower interest rates this year. (Jin10)