Market Extra: Why March’s CPI report could upset the stock market, seal the deal on the next rate hike 

by | Apr 10, 2023 | Stock Market

Investors in the U.S. stock market will be closely watching Wednesday’s inflation report as it would be one of the last key data points before the Federal Reserve’s next interest-rate move. Employment data for March, released on Friday, indicated a resilient labor market, and was viewed as boosting the chances of another 25-basis-point rate hike next month. 

The March CPI reading from the Bureau of Labor Statistics, which tracks changes in the prices paid by consumers for goods and services, is expected to show a 5.2% rise from a year earlier, slowing from a 6% year-over-year rise in the previous month, according to a survey of economists by Dow Jones. “If the headline CPI meets expectations or misses some, it isn’t going to matter,” said Michael Kramer, founder of Mott Capital Management, adding that the Fed likely will raise rates by about 25 basis points in May. “The odds of a Fed rate hike have increased to 70% from around 50% before [Friday’s] jobs report,” he said, adding that unless there is a significant miss on the CPI, the Fed will boost its policy rate above 5% “because inflation remains too high.” Core CPI, which strips out volat …

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