Global financial markets await major US inflation data later today for January, which will showcase the level of inflationary pressures on Fed policymakers.
The data comes after a string of bullish remarks by Fed officials, which hinted the Fed won’t start cutting rates in March.
Now investors await crucial consumer prices data to gauge the likely date for the upcoming US interest rate cut.
Fed Remarks
Several US Fed officials dismissed the need for early US rate cuts and policy easing this year in light of recent data.
Richmond Fed President Thomas Parkin said that Fed policymakers have ample time to decide on US rate cuts.
Minneapolis Fed President Neil Kashkarei said the Fed has time to study recent data before deciding on rate cuts and policy easing.
Chicago Fed President Austan Goolsbey said he’s like to see more positive inflation data before deciding on rate cuts.
US Rates
Current pricing for a Fed 0.25% interest rate cut in March stands at 13.5%, while pricing for such a cut in May stands at 57.5%.
Traders now expect four US rate cuts this year totalling 100 basis points, down from previous expectations of six rate cuts totalling 150 basis points back in January.
Inflation Data
US consumer prices are expected up 2.9% y/y in January, slowing down from 3.4% in December, while core prices are expected up 3.7%, slowing down from 3.9%.
A special focus is on core consumer prices which are monitored to gauge their march towards the 2% Fed inflation target.
The Dollar
Obviously, strong US inflation data will hurt the odds of US interest rate cuts in March and May, in turn boosting the dollar, and vice versa.
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