Fed Rate Cuts Are Now a Matter of If, Not Just When

Fed Rate Cuts Are Now a Matter of If, Not Just When By Hardika Singh

Consumer prices came in hotter than expected for March, sending stocks lower and bond yields higher. Federal Reserve officials neared agreement last month on a plan to slow the runoff of their $7.4 trillion in asset holdings, according to minutes of their meeting released Wednesday. Meanwhile, the St. Louis office district is empty, with boarded-up towers, copper thieves and failing retail. (Even the Panera outlet shut down.) Former President Trump's former chief financial officer was sentenced to five months in jail. Read on for this news and more.

Top News

Another firmer-than-anticipated inflation report delivered a meaningful setback Wednesday to the Federal Reserve's hope that it could buoy prospects of a so-called soft landing by dialing back some of the past year's interest-rate increases.

Solid hiring and the prospect that inflation might settle out closer to 3% than the Fed's 2% goal could call into question whether the central bank will be able to cut rates until much later in the year without evidence of a sharper slowdown in the economy.

Hot Inflation Report Derails Case for Fed June Rate Cut Fed Prepares Slower Pace of Runoff for Portfolio 'Fairly Soon'

Minutes from the Fed's March 19-20 meeting indicated most officials favored plans to reduce the pace of their portfolio runoff "by roughly half" of the current overall pace.

The minutes also showed that officials agreed they were prepared to hold interest rates at their current level for longer than anticipated should recent declines in inflation subside.

Uberti's Take Energy Inflation Is Back. How Much Should the Fed Care?

The Federal Reserve tries to look past volatile energy prices when analyzing inflation and setting interest rates. But the oil market these days is getting harder to ignore . Americans' prices at the pump rose faster in March than any other component of the consumer-price index, the Labor Department said Wednesday, adding momentum to an inflation bump that outstripped Wall Street's expectations.

U.S. Economy The Real Estate Nightmare Unfolding in Downtown St. Louis

Cities such as San Francisco and Chicago are trying to save their downtown office districts from spiraling into a doom loop. St. Louis is already trapped in one.

As offices sit empty, shops and restaurants close and abandoned buildings become voids that suck the life out of the streets around them. Locals often find boarded-up buildings depressing and empty sidewalks scary. So even fewer people commute downtown.

Financial Regulation Trump's Former CFO Sentenced to Five Months in Jail

Allen Weisselberg, the former finance chief of Donald Trump's family business, was sentenced Wednesday to five months in jail for lying during a civil-fraud investigation into the former president.

Weisselberg pleaded guilty to two counts of perjury last month. He admitted to lying to investigators at the New York attorney general's office and later on the stand while testifying at Trump's civil-fraud trial.

KPMG Fined Record $25 Million in Exam-Cheating Scandal

KPMG's Netherlands unit agreed to pay a $25 million fine over claims of exam cheating and misinforming investigators, the largest monetary penalty imposed on an auditing firm by the Public Company Accounting Oversight Board.

Forward Guidance Thursday (all times ET)

8:15 a.m.: ECB interest rate decision

8:30 a.m.: U.S. weekly jobless claims

8:30 a.m.: U.S. producer-price index for March

Friday

2 a.m.: U.K. gross domestic product

2 a.m.: U.K. industrial production

8 a.m.: ECB's Elderson speaks at Delphi Economic Forum IX

10 a.m.: University of Michigan consumer survey, preliminary for April

2: 30 a.m.: Atlanta Fed's Bostic in moderated conversation at Confronting America's Housing Crisis

3:30 a.m.: San Francisco Fed's Daly speaks at Fintech Conference: The Evolution of Fintech

Research North American Freight-Rail Traffic Still Rising

North American freight-railroad traffic rises 4.6% for the week ended Saturday, paced by double-digit gains in intermodal volumes. Carloads slip 1.3% on 12 reporting U.S., Canadian and Mexican railroads, while the volume of intermodal units jumps 11.2%, data from the Association of American Railroads show. On the heels of rising traffic for most of February and March, analysts at Bank of America nudged up their first-quarter rail earnings estimates by 1% on average to account for slightly better-than-expected volumes. North American rail traffic is up 2.2% for the first 14 weeks of the year, AAR says. - Colin Kellaher

Basis Points The Bank of Canada left its benchmark interest rate unchanged for a sixth consecutive time at 5%, and said a cut in June is possible so long as incoming data assures officials that downward momentum in inflation is sustainable. - Paul Vieira Switzerland said UBS will have to substantially raise its capital levels to comply with new rules aimed at preventing a repeat of Credit Suisse's near-collapse last year. The country's federal council on Wednesday proposed new powers over banks and their senior executives, and better backstop measures for banks running low on cash. - Margot Patrick Inflation in China retreated sharply , reigniting concerns over deflation even as its economy starts to feel the benefit of a manufacturing-led revival that is fueling trade tensions overseas. - Jason Douglas Asia's economic expansion is expected to remain healthy this year despite a slowdown in China and uncertainty abroad, the Asian Development Bank said as it revised up forecasts for the region. -Fabiana Negrin Ochoa The Reserve Bank of Australia's caution about moving the policy needle too close to neutral continues to pay big dividends , with the U.S. interest rate outlook now flipped entirely from where it started the year. - 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

04-11-24 0716ET