U.S. inflation remains high at an annual rate, and bets on a rise without a rate cut this year

The Fed's preferred measure of inflation, the PCE Price Index, recorded an annualized rate of 2.7% in March, and price growth remained stubbornly above the central bank's 2% target. Core PCE rose 2.8% year-on-year. U.S. stock index futures edged higher and bond yields edged lower after the report was released. Economists had expected overall PCE to rise 2.6% year-on-year and core PCE to rise 2.7%. Both overall and core PCE rose 0.3% from February to March. A series of higher-than-expected inflation data this year has put the Fed in a bind. Going into 2024, investors expect the Fed to cut interest rates sharply this year as inflation cools. However, the opposite is true, and inflation data has been weakening interest rate cut expectations. Investors now see a near 20 per cent chance that the Fed will keep rates on hold until the end of the year, up from less than 1 per cent a month ago, according to CME.