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David Uberti and Nick Timiraos of the Wall Street Journal report on last week’s CPI data showing that U.S. inflation eased slightly in April, with the consumer-price index rising 3.4% from a year ago. This inflation data should allow Fed officials to breathe more easily as it suggests prices and economic activity aren’t reaccelerating. Uberti and Timiraos note that this reading alone won’t change Fed officials’ calculations about whether and when to begin cutting rates. |
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Source: WSJ (May 2024) Alicia Wallace of CNN comments on inflation, highlighting that the stock market rejoiced on the data, which shows an easing in inflationary pressures. Specifically, investors think that lower inflation and weak retail sales may lead to a Federal Reserve interest rate cut this year. Fannie Mae also comments on the CPI data, noting that: “The April CPI report was in line with our expectations and is encouraging compared to the data received in the first quarter, though it’s clear that some underlying inflation remains sticky. Core services, for example, remained at a pace that is faster than what would be consistent with the Fed’s 2 percent inflation target but did slow to a 0.4 percent month-over-month gain from 0.5 percent in February and March and 0.7 percent in January…We continue to expect inflation will drift downward as the year progresses but will remain sticky enough to prevent rate cuts before September.” As a result of the soft inflation data, mortgage rates dropped, according to Matt Carter of Inman. Mortgage rates retreated from 2024 highs for the third week and were below 7% after last week’s inflation release. This data will potentially incentivize Federal Reserve policymakers to cut rates sooner rather than later, as it was the first downward move in annual price growth since January. Finally, J.P. Morgan Wealth Management comments on the inflation data, highlighting that the Fed focuses on core inflation, of which shelter costs remain sticky. In April, the primary driver of core services inflation was the shelter component, with the shelter index, owner’s equivalent rent (OER), and rent of primary residence all increasing by 0.4% month over month. That said, J.P. |
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Source: J.P. Morgan (May 2024) |