US CPI Data To Reveal How May Interest Rates Should Be Set

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As the US struggles with an economic crisis, the US CPI data will soon forecast how interest rates and economic policies might change for the nation in the upcoming months. With prices rising through the roof, inflation must be slowed. To prevent a recession, this data will guide economists on how to handle finances of the country for the next quarter.

What’s been going on

After the failure of Silicon Valley Bank and Signature Bank, the US was propelled into one of its biggest financial crises since 2008. The sudden collapse ran a panic through investors and deposit holders alike. As people started pulling out their money and saving instead of spending, prices hiked up.

Despite the government’s efforts, the market continues to raise prices and inflation is out of hand. With February’s inflation at 6%, its expected that March reports show a slowdown at 5.2%. With consumer prices steadily rising since March 2021, the US has set a record for peak inflation.

What’s next

Experts suggest that the Federal Reserve must stop raising interest rates. Nigel Green, the CEO and founder of the financial advisory and asset management organization warns against the dangers of this continued pattern. With inflation at an estimated 5.6% increase since last year, performance seems steady since last month.

Given that the US is at the center of global trades and the US dollar is the most important currency in today’s date, the CPI data is heavily awaited. Policy setters decide future operations based on how the Federal Reserve will set their interest rates. This data is essential to investors as they plan their next moves accordingly.

Leaving out food and energy, core inflation is expected to slowly ease down over the next few months.

The deVere CEO believes the time lag between monetary policies is a driving force compelling a direction towards a recession. Experts believe policies will be taking up to 18 months to reach their full effect, requiring a long-term vision and accordingly compliant financial decisions. As the US Treasury yield curve is inverted, the 193 days indicate a recession that will be hard to avoid. Predicting financial events since 1950, this inverted curve has been a strongly reliable source for financialists.

With the previous banking industry failures in the last quarter, economic growth is likely to be weak and the credit market will be stingy.

What happens in case of a recession

As the biggest and one of the most important economies in the world inches towards a recession, the policies they set and their interest rates will have a global impact. The developing countries that depend on the economic growth and performance of the US are likely to suffer and global growth is expected to be at a low of 3%.

It doesn’t seem like the global economy will recover from the pandemic any time soon. Doubts about whether the Fed will pivot continue as the world gears up for a crisis.

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