Market expectations: U.S. February PCE data shows inflation is still high, and the Fed may keep interest rates unchanged in April

Gate News message. April 9: The market expects that the U.S. February PCE data will show that inflationary pressures persist. According to consensus expectations, the year-over-year PCE month-over-month is expected to rise to 0.4% in February and remain at 2.8% year-over-year; core PCE is expected to be about 3.0% year-over-year, above the Federal Reserve’s 2% target level. The market believes that this inflation rebound is mainly driven by a recovery in commodity prices and higher energy costs, and that service-sector inflation is unlikely to fall meaningfully in the near term. Against this backdrop, the Federal Reserve may continue to keep the 3.50%-3.75% interest-rate range at its April policy meeting, which would be the third consecutive time it pauses rate cuts. Market pricing shows that currently more than 97% of traders expect rates to remain unchanged in April, and rate-cut expectations for the rest of the year have cooled.

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