Fed Splits on Rate Hike as 1-Year Inflation Breakeven Falls Below 2%
Updated
Updated · Invesco · Jun 22
Fed Splits on Rate Hike as 1-Year Inflation Breakeven Falls Below 2%
3 articles · Updated · Invesco · Jun 22
Summary
Reports last week showed Federal Reserve officials divided over another rate hike even as market measures now point to cooling price pressure rather than overheating.
Oil prices have dropped sharply since the March Iran-war spike, pulling inflation breakevens lower; the 1-year breakeven is now below 2%, reversing the spring inflation scare.
Labor data also argue against tighter policy: job growth has been relatively soft, wage gains have moderated, and the yield curve has flattened in a sign policy may already be restrictive.
Markets sold off after the Fed debate, but the report argues patience is the likelier course and that the next move could be an easing if incoming data keep weakening.