Meanwhile, the Consumer Price Index on Wednesday is expected to show that headline inflation rose by 0.2% in March, while core inflation rose 0.4%. This follows a series of data leading up to the event on Wednesday, including Friday´s Nonfarm Payrolls that have added to expectations that the Federal Reserve will complete one more rate hike. The data showed that employers added 236,000 jobs while the unemployment rate fell to 3.5%.
Consequently, The Federal Reserve is expected to hike rates by an additional 25 basis points at its May 2-3 meeting, before pausing in June. Markets are also pricing for the Fed pivot where a rate cut by year-end on could be on the cards to combat the risks of a recession. Nevertheless, Fed officials have stressed that the central bank's policy path will depend on incoming data. Chicago Fed President Austan Goolsbee said the Fed should be cautious about raising rates in the face of recent banking stress. Meanwhile, New York Fed President John Williams explained that the prospect of the Fed raising its benchmark interest rate only once more and in a 25 basis point increment is a useful starting point.
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