(3 minutes read)
The US dollar suffered a sharp decline riding on the back of the release of the consumer price index. Consumer prices rose less than anticipated in March. This is indicative, among other things, of a lower pick up of the economy and demand contraction driven by lower consumer spending than expected. Is the US economy cooling? The recent figures released by the Fed are seemingly suggestive of that.
The US dollar suffered a sharp decline riding on the back of the release of the consumer price index. Consumer prices rose less than anticipated in March. This is indicative, among other things, of a lower pick up of the economy and demand contraction driven by lower consumer spending than expected. Analysts speculate that the Federal Reserve may halt its rate-hiking efforts, to cool down the economy. They also point out that the headline inflation coming down more than expected would have a major impact on the global economy since the movement of the value of the Greenback is closely linked to the consumer prices index and exchange rates of individual countries.
Federal authorities point out that last month’s Consumer Price Index (CPI) only saw a 0.1% climb, falling short of the forecasted 0.2% gain. In February, the rise was 0.4%. Over the 12 months leading up to March, the CPI increased by 5.0%. This represents the smallest year-on-year gain since May 2021. As against this, the CPI had risen by 6.0% on a year-on-year basis in February. The CPI increased 0.4% last month after rising 0.5% in February. Sticky rents continued to drive core CPI.
The dollar index was last at 101.68, down 0.41% on the day and below the level of around 102.11 before the data. The euro reached US$1.09900, the highest since Feb. 2, and was last at US$1.0967, up 0.48% on the day. The dollar dipped to 133.04 Japanese yen, from around 133.85 before the data. According to Fed funds futures traders, there is a 69% chance that the Fed will increase rates by 25 basis points at its meeting on May 2-3., which was approximately 76% prior to the latest data.
Read Also:
https://trendsnafrica.com/china-rebuts-the-us-charge-of-creating-debt-traps-in-african-countries/
https://trendsnafrica.com/nigeria-to-get-us-800-million-from-wb-for-creating-safety-net/
https://trendsnafrica.com/zambia-signs-mou-with-us-to-boost-trade/
The data showed that though inflation is still well above where the Fed feels comfortable, it is at least showing continuing signs of decelerating. Policymakers target inflation around 2% as a healthy and sustainable growth level. The headline annual increase for the CPI was the smallest since June 2021.
