Core inflation in the US rose to 5.6% in March, on an annual basis, compared to 5.5% in February, which enhances the possibility that the US Federal Reserve will continue to raise interest rates.
While the general inflation rate, which includes highly volatile commodities such as food and energy, reached 5% in March, on an annual basis, below expectations of 5.1%, and significantly lower than the inflation recorded in February at 6%.
Betty Nader, financial analyst at East Economy, said that the decline in the general inflation rate, on an annual basis, from 6% in February to 5% this month, is considered A positive factor for stocks and bonds, but a negative factor for the US dollar.
At the opening of the US market today, Wednesday, US stock indices rose by 0.7% for each of the “Standard & Poor’s 500” and “Nasdaq” indices. The yield on 10-year Treasury notes fell to 3.392%. While the price of the dollar fell to 1.099 once morest the euro.
Core inflation in America exceeds expectations and puts the Fed in front of difficult choices
On the other hand, core inflation remained high and higher than headline inflation. This is mainly because, according to Nader, “service sector activity is less associated than others with high interest rates.” It is likely that “the entrenchment of inflation will prompt the Fed to raise interest rates by 25 basis points at its next meeting, which is in line with the market’s view.”