Will Fed pivot soon?

 

 

 

 Now, for months inflation is moving in the right direction. So, can we expect the Fed to pivot soon? Not so fast!
While the headline CPI numbers have fallen substantially, the core CPI (which doesn’t include food and energy) is more stubborn. And the Fed focuses more on this core CPI (see the chart below).
 

The dotted light blue line is core CPI (circled it in dotted black). While falling from its September high, it remains elevated at 5.5% which isn’t tremendously lower than its peak level of 6.6% last fall. As such, it become nearly certainty that the Fed will pause the rate hike at its Jun meeting, expecting a rate cut (the pivot) any time soon is just too much to ask.