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Analysis: US inflation may hinder Fed from cutting interest rates this year

IG Group analyst Jeremy Naylo said that the Federal Reserve interest rate decision will be a turning point this week, although we expect no change in interest rates. Prior to this, the US Department of Statistics will release May CPI data.



This is likely to indicate that the inflation stickiness we are seeing will continue to exist. It is expected that the US core CPI in May will rise by 3.5% YoY, but the real concern is the service industry. In the past two months, the US service industry CPI has been rising. It rose by 5.3% YoY in April.



Daily FX analyst Richard Snow tells traders that there is a general expectation that the so-called 'super core' inflation, which is the service sector inflation minus housing inflation, will at least keep the year-on-year increase of the past two months at 5.3%, which may mean that the Fed has almost no room to cut interest rates.
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