The Fed's Challenge : Has It Hit the Brakes Hard Enough?

The Fed's Challenge: Has It Hit the Brakes Hard Enough? ECB Targets June Cut. Will The Fed Be There? By Hardika Singh

The Fed meets this week to decide whether, when and by how much it should cut rates this year. Hot inflation readings suggest it may be a laggard. Meanwhile, Bill Ackman is fighting a losing battle against Bill Ackman. Read on for this news and more.

Top News The Fed's Challenge: Has It Hit the Brakes Hard Enough?

The Fed meets this week to decide whether, when and by how much it should cut rates later this year. A key question it must answer: Just how tight is its monetary policy? Not very tight, judging by the experience of builders such as Sandlin and consumers' overall resilience. For Fed officials, that argues against cutting rates much, or soon, especially after two months of firmer-than-expected inflation.

On the other hand the federal-funds rate target, at 5.25% to 5.5%, is relatively high in nominal and inflation-adjusted terms, and there are signs the economy's current strength won't last-a point Chair Jerome Powell has hinted at. If so, then monetary policy might soon start to look tight, reinforcing the case for cutting.

A key gauge of inflation, which excludes volatile energy and food prices, has fallen below 3% in recent months from nearly 5% early last year.

Hannon's Take ECB Targets June Cut. Will The Fed Be There?

The central banks of rich countries are preparing to lower their key interest rates, but a series of surprisingly hot inflation readings suggest the U.S. Federal Reserve may be a laggard .

Financial Regulation Roundup Phony Billionaires on Facebook Are Scamming Americans Out of Their Life Savings

Bill Ackman is fighting a losing battle against Bill Ackman . Impostors posing as the billionaire hedge-fund manager on Facebook keep luring hapless investors into stock-market scams-and the real Ackman has been powerless to stop them.

Forward Guidance Monday (all times ET)

6 a.m.: European Union harmonized consumer-price index

10:30 p.m.: Bank of Japan interest rate decision

11:30 p.m.: Reserve Bank of Australia interest rate decision

Tuesday

8:30 a.m.: Canada consumer-price index

8:30 a.m.: U.S. housing starts

Research BOE Likely to Start Rate Cuts in June, Danske Bank Says

The Bank of England could start interest-rate cuts in June with a 25 basis-point reduction and deliver a total of 75 bps of rate cuts in 2024, Danske Bank says in a note. Danske says its view is unaltered by the spring budget statement and recent economic data releases. Markets price in the possibility of a 23.5 bps BOE rate cut in August and a total of 60 bps of rate cuts in 2024, Refinitiv data show. Danske expects the BOE to keep the bank rate unchanged at 5.25% this week, as broadly expected by analysts and investors. - Miriam Mukuru

Basis Points U.S. consumers are proving a little less optimistic about the country's economic outlook, despite a backdrop of easing inflation, energetic growth and impending cuts to interest rates. The University of Michigan's consumer survey slipped backward slightly to 76.5 in mid-March from 76.9 last month, dragged downward by a more negative outlook for the coming months. The reading was worse than the slight uptick expected by economists, according to a poll carried out by The Wall Street Journal. - Joshua Kirby While borrowers in countries including Canada will benefit from the likely extent of interest rate cuts that lay ahead, they will be disappointed by how the local currency reacts, Desjardins' Royce Mendes suggests. The head of macro strategy expects the U.S. dollar to remain strong against the Canadian currency, assuming the rate-cutting cycle is less pronounced in America. - Robb Stewart Feedback Loop

This newsletter is compiled by Hardika Singh in New York.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

03-18-24 0715ET