Thursdays briefing revealed a stark change in forecasts for US interest rates, driven by a higher-than-expected March Consumer Price Index (CPI).Chief Economist Mario Mesquita from Ita Unibanco voiced uncertainties around the anticipated cuts.Initially, experts predicted monetary easing as early as March, with expectations later shifting to May, then June.Now, they eye the Federal Reserves September meeting with doubt.
On the preceding day, CME Groups FedWatch tool showed a notable shift.Thursdays Morning Call: Shift in Expectations for US Interest Rate Cuts.
(Photo Internet reproduction)A quarter of analysts now predict a rate cut in November, a jump from just over 4% previously.Additionally, 13% foresee rates staying between 5.25% and 5.50% into late 2024, a significant rise from 1.3% a week before.This pessimism contributed to a downturn in US stock markets.
The Dow Jones, Nasdaq, and S-P 500 all recorded losses.]Thursdays Morning Call: Shift in Expectations for US Interest Rate CutsIn Brazil, despite favorable CPI data, the Ibovespa index dropped 1.41% to 128,053 points, and the dollar increased to R$ 5.078.Economists are hopeful for at least two more 0.50% cuts to the Selic rate, contingent on both domestic inflation alignment and US rate reductions.Mesquita highlighted risks from Brazils fiscal challenges, potentially hindering Selic rate cuts and affecting the currency.The days economic agenda includes Brazilian retail data for February and the US Producer Price Index (PPI) for March.Moreover, the European Central Bank, holding its rates steady, may hint at future cuts for the Eurozone in June.This narrative underscores a global financial landscape marked by uncertainty and cautious optimism.