Data released by the US Commerce Department on Friday, the 31st of May 2019, had revealed that the US Consumer price index had surged by the most in April in 15 months, however, Friday’s (May 31st) data had also unveiled that US consumer spending had lost its sparks further pointing to a slowdown in economic growth despite a strong labor market, which could keep inflation under check in a longer-term outlook, given US consumers’ caution amid a protracted trade war with China which had already started off to hit the US consumers with higher costs on consumer goods.
Besides, according to multiple analysts, the US Commerce Department’s Friday’s (May 31st) report had been in alignment with the Fed Chair Jerome Powell’s latest comment over May 21st’s FOMC minutes, while the Fed Chair had been quoted saying, “Recent disinflationary trend may wind up being transient”.
As the US inflation remained well under control below US Central Bank’s 2.0 percent target, and US economy had been pointing towards a sharp slowdown on both energies and consumer price index given the extent of Mexico tariff threat pronounced by the US President on last Thursday (May 30th), analysts’ bet over Fed to slash interest rate later part of the year had surged robustly.
Adding that, Fed might just listen to mob’s call to cut interest rate amid a persisting slowdown trend looming over the economy, a chief economist at MUFG in New York, Chris Rupkey said, “The Fed is in a good place when it comes to its current policy, but it won’t be for long if the market’s forecasts for rate cuts are to be believed.
The market and the president want rate cuts and they might just get them if this slowdown persists and the Fed caves to the mob of public opinion”.