Powell’s colleagues – Cleveland Fed chief Loretta Mester and Kansas City Fed boss Jeffrey Schmid – both chimed with Powell’s ‘patient’ line overnight and the expectation that inflation would subside again.
Their takes put a gloss on an otherwise mixed PPI release that had above-forecast monthly gains but downward revisions to prior months, more contained annual measures and some encouraging details.
Based on the PPI data, economists estimate the Fed’s favored core PCE price index could rise by 0.2% or 0.3% in April after gaining 0.3% in March. That would result in core inflation increasing by about 2.8% year-on-year, matching March’s advance.
Those forecasts will hinge on today’s April’s CPI data, however. The monthly core CPI is expected to have eased to 0.3% from 0.4%, bringing annual core inflation back down to 3.6% from 3.8% in March.
Perhaps lost in the inflation focus is today’s release of April retail sales data – a pretty important element in road testing second-quarter U.S. growth estimates still running north of 4%.
Elsewhere, the dollar slipped a touch in line with Treasury yields, hitting a one-month low versus the euro on Wednesday despite beefed up expectations for a rate cut from the European Central Bank next month.
Even typically hawkish Dutch central bank chief Klaas Knot, speaking with Powell on Tuesday, seemed to think a June cut is now baked in.
In company news, shares in Austria’s Raiffeisen Bank dropped 2% after news it was warned by the U.S. Treasury in writing that its access to the U.S. financial system could be curbed because of its dealings in sanctioned Russia.
