Bets on the Fed not cutting interest rates this year are rising, with a near 20% chance of keeping rates unchanged by the end of the year

Mars Finance News, the Fed's preferred inflation indicator, the PCE price index, recorded an annual rate of 2.7% in March, and the price increase was still stubbornly above the central bank's 2% target. Core PCE rose 2.8% year-on-year. After the report was released, U.S. stock index futures rose slightly and bond yields fell slightly.

Economists had previously expected the overall PCE to rise 2.6% year-on-year and the core PCE to rise 2.7%. From February to March, both the overall and core PCE rose 0.3%. A series of higher-than-expected inflation data this year has put the Fed in a dilemma. Entering 2024, investors expect the Fed to cut interest rates sharply this year as inflation cools. However, the opposite is true, and inflation data has been undermining expectations of rate cuts.

According to CME data, investors currently expect the Fed to keep interest rates unchanged by the end of the year with a probability of nearly 20%. A month ago, the probability was less than 1%.