United States inflation in March hits Fed goal

United States inflation in March hits Fed goal

United States inflation in March hits Fed goal

A hardening in expectations for Fed rate rises contrasts with signs that other central banks are taking a lower gear on the road away from easy monetary policy.

The bank raised interest rates to a 1.5 to 1.75 percent target range in March and is expecting two more hikes in 2018.

Treasury yields have surged over the past month as concerns about a trade war with China gave way to worries about firming inflation, a tight job market and a hawkish Fed. March's Personal Consumption Expenditure (PCE) results fell short of forecasts month-on-month, as did the latest pending home sales results and Chicago PMI.

Other data last week showed that while US economic growth slowed to an annualized rate of 2.3 percent in the first quarter, wages and salaries shot up 0.9 percent during the same period.

"Economists expect the economy added 185,000 jobs in April, a rebound from March's disappointing headline jobs gain while the unemployment rate is expected to drop to 4% after it held at 4.1% for a sixth-straight month in March", according to Yahoo Finance.

The economics calendar will bring the monthly jobs report, which should show the USA economy continues to create jobs in the 10th year of the economic recovery.

Fed officials are scheduled to convene on Tuesday and Wednesday for a regular policy meeting. The dollar slipped against a basket of currencies after the data.

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After the report, the Dow Jones industrial average, S&P 500 and Nasdaq 100 futures held onto early gains on the stock market today.

Overseas, investors will be watching North Korea, after the nation's leader met with the leader of South Korea on Friday. The government reported last Friday that wages and salaries recorded their biggest increase in 11 years in the first quarter.

The Commerce Department's report on Monday also showed consumer spending increased 0.4 percent in March after being unchanged in February.

Inflation is also likely to be fanned by an anticipated pickup in economic growth, driven by a $1.5 trillion tax cut package and increased government spending.

Unemployment is now at a 17-year low of 4.1 percent, and economists have suggested that with given the tight labor market, wages will begin to rise and that will exert an upward pressure on inflation.

First-quarter GDP grew at a 2.3% annualized rate, GDP data showed April 27, faster than the forecast for a reading of 2% but weaker than the 2.9% in the fourth quarter.

The euro was almost flat at $1.2075 after slipping 0.4 percent overnight and approaching $1.2055, the 3-1/2-month low set on Friday. Personal income rose 0.3 percent in March after increasing by the same margin in February.

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