By Chuck Mikolajczak
NEW YORK (Reuters) - Barclays (LON:BARC) economics team on Wednesday said it now sees the U.S. Federal Reserve cutting rates just one time in 2024, by 25 basis points (bps), in light of the upside surprise to the consumer price index (CPI) data released today.
Data on Wednesday showed U.S. consumer prices increased more than expected in March, a third straight month of strong readings, according to data released by the Labor Department, and came on the heels of a strong jobs report last week.
"With this release likely eroding the FOMC’s confidence that inflation is moving sustainably toward 2%, we adjust our policy rate call. We no longer think the FOMC will be comfortable initiating every-other-meeting cuts in June. Instead, we expect only one 25bp cut this year, in September," said the note.
While the firm said a slowing in inflation by June to 0.2% for core PCE inflation should open the door for a September cut, it is also almost just as likely the cut could be pushed as far back as December, "especially if disinflationary progress proves slower than expected."
Barclays said it now sees the fed funds target range to be between 5.00% and 5.25% at the end of 2024, and 4.00% to 4.25% by the end of 2025.