More Inflation Data in Focus After Fed Pencils In Just One Rate Cut

More Inflation Data in Focus After Fed Pencils In Just One Rate Cut By Hardika Singh

The Federal Reserve on Wednesday held its benchmark rate steady and penciled in just one interest-rate cut for this year. May's inflation report, released earlier in the day, showed a broad-based slowdown in price pressures, but Fed Chair Jerome Powell said the central bank needs to see "more good data" before cutting rates. More inflation data is coming out today, with the producer-price index for May due at 8:30 a.m. ET. Meanwhile, fallen crypto tycoon Do Kwon's company, Terraform Labs, agreed to one of the largest penalties ever to settle a civil securities-fraud lawsuit. Read on for this news and more.

Top News Fed Projects Just One Cut This Year Despite Mild Inflation Report

Fed officials penciled in just one interest-rate cut for this year , indicating most are in no hurry to lower rates, even after a widely watched report Wednesday showed inflation improved last month.

More on the Fed:

Stung by Past Mistakes, a Wary Fed Takes Its Time The Fed's Summary of Economic Projections The Fed's Monetary-Policy Statement U.S. Economy Inflation Is Cooling - but Americans' Concerns About It Are Hotter Than Ever, by One Measure

Wall Street investors are cheering an inflation report showing no monthly increase in the cost of living during May - but good luck convincing consumers that the flat numbers are positive news.

Americans' worries about inflation have hit their highest level since two years ago, when TransUnion first started measuring it, according to the credit-reporting bureau's latest quarterly survey of consumers' mood and finances.

More than eight in 10 people, or 84%, said inflation was their top household-finance concern in the second quarter, TransUnion researchers said Wednesday. That's up from 82% in the first quarter and 79% in the second quarter of 2023. ( MarketWatch )

Financial Regulation Do Kwon's Crypto Firm Agrees to Pay $4.5 Billion Penalty to SEC

Terraform Labs agreed Wednesday to pay the Securities and Exchange Commission just under $4.5 billion and wind down its operations- one of the largest penalties ever to settle a civil securities-fraud lawsuit. Do Kwon, founder of the now-bankruptcy crypto firm, agreed to pay $204 million as part of the deal.

Forward Guidance Thursday (all times ET)

8:30 a.m.: Producer price index

8:30 a.m.: Initial claims

12 p.m.: Economic Club of New York event with Treasury Secretary Janet Yellen and New York Fed President John Williams

Friday

5 a.m.: Japan monetary policy meeting decision

10 a.m.: University of Michigan survey of consumers (preliminary)

7 p.m.: Fed Governor Lisa Cook speaks at the Celebrating 50 Years of the AEA Summer Program event

Research Fed Seen As Still Having 'Many Miles to Go' Before Cuts

Not everybody is overexcited with Wednesday's slower-than-expected CPI inflation reading. "If the goal of the Fed is to keep rates restrictive until inflation returns to target, we have many miles to go before we can rest," NorthEnd's Alex McGrath says in a note. May's 12-month reading was 3.3%, or 3.4% for the core gauge. McGrath says that, while the data could be cause for a small celebration, "the fact remains that three years into this cycle inflation is still running at 3.3% yoy, well above the target." - Paulo Trevisani

Basis Points Americans are still losing a lot of money on their money . As the Fed moved to tame inflation and raised interest rates over the past two years, the returns on bonds and other savings vehicles surged. Many people took advantage of the rising rates, but many others didn't. About $17.5 trillion sits in commercial banks, for example, and the average savings account earns 0.45% in interest a year, according to the Federal Deposit Insurance Corporation. - Oyin Adedoyin and Ashlea Ebeling The Federal Reserve's decision to keep interest rates steady at a two-decade high wasn't exactly music to the ears of commercial property owners facing an estimated $2 trillion mortgage bill coming due through the end of 2026, or their lenders. "We see more risks of bank failures, and a lot of forced consolidation across banking," said Greg Friedman, co-founder of Atlanta-based real-estate investment firm Peachtree Group. . - Joy Wiltermuth U.S. Sen. Elizabeth Warren introduced a new bill to crack down on private-equity misconduct in the healthcare sector, adding to the political pressure buyout firms face following numerous bankruptcies of medical businesses. The Massachusetts Democrat, perhaps private equity's most prominent critic in Congress, on Tuesday proposed the Corporate Crimes Against Health Care Act to create stiff penalties for investors who profit at the expense of healthcare businesses they own. - Chris Cumming Bank of Canada Governor Tiff Macklem said its officials are determined to get inflation down to the central bank's 2% target, but there's enough cooling in the economy to start bringing rates lower. Macklem said rate policy has had more traction in Canada relative to the U.S.-due in part to some of the highest consumer and corporate debt levels in the developed world-and that allowed Canada's central bank to cut before the Federal Reserve. - Paul Vieira The European Union plans to impose tariffs on imported Chinese electric vehicles , marking an early victory for officials who view the imports as a threat to the region's powerful car sector despite deep divisions in Europe over the issue. - William Boston and Kim Mackrael As France heads toward snap elections at the end of June, French government bonds could slide further , having already taken a major hit from the weekend's European parliamentary elections, pushing their yields even higher, analysts said. - Emese Bartha Taiwan's central bank held interest rates steady as cooling inflation and solid economic growth give it space to keep policy settings unchanged for now. The Central Bank of the Republic of China (Taiwan) kept its benchmark discount rate at 2.000% on Thursday, as expected in a poll of seven analysts by The Wall Street Journal. It maintained its secured loan rate and unsecured loan rate at 2.375% and 4.250%, respectively. - Sherry Qin Australia's unemployment rate fell slightly in May , in line with a seasonal shift in the job market that saw more people starting work. Employment rose by 39,700 in the month, the Australian Bureau of Statistics said Thursday, beating the expected rise of around 30,000. The unemployment rate fell by 0.1 percentage point to 4.0% in May from April, the ABS said. - James Glynn About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Hardika Singh in New York. Send your tips, suggestions and feedback to [[e-mail]].

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

06-13-24 0715ET