Fed Rate-Cut Caution Expected to Increase Due to Slowing Glacial Inflation

US consumer-price data is projected to show a glacial slowdown in underlying inflation, following strong jobs numbers, according to Bloomberg. The March core consumer price index, excluding food and fuel, is expected to rise 0.3% from the previous month, with a similar increase in the overall CPI. The core price gauge is projected to have climbed 3.7% from a year ago, the smallest gain since April 2021.

The Federal Reserve has been cautious in lowering interest rates, waiting for clearer signs of inflation slowing towards their target. Despite recent progress, the annual inflation figure remains below the peak reached in 2022. The latest jobs report, with a 303,000 increase in March payrolls, may raise questions about the cooling labor demand and its impact on inflation.

Fed officials are consistent in their message that waiting for a clearer indication of slowing inflation is necessary before reducing borrowing costs. The upcoming Fed meeting on April 30-May 1 is expected to hold rates steady, with traders monitoring remarks from New York Fed President John Williams.

In other parts of the world, central banks from New Zealand to the euro area are set to hold rates steady, while Israel faces a decision between a rate cut and a pause. Former Fed Chair Ben Bernanke is scheduled to review Bank of England forecasting errors.

Overall, the global economy is closely watching inflation trends and central bank decisions in the coming week, with a focus on Asia, Europe, the Middle East, Africa, and Latin America. The European Central Bank is expected to hold rates steady, while Hungary and Serbia are set to make policy decisions. Inflation data from Russia, GDP figures from Britain, and a new currency launch in Zimbabwe are also on the agenda.