Investors
will carefully watch the U.S. inflation data due later on Wednesday, amid
rising bets the Federal Reserve may cut interest rates again during next week’s
policy meeting.
The
Federal Reserve is expected to cut interest rates again in their meeting next
week, in response to concerns about the spread of the Coronavirus and its
negative impact on the world’s biggest economy.
The
U.S. consumer price index data is expected to stagnate during February after a
0.1 percent surge in January, while on an annual basis the index may decelerate
to 2.2 percent, from the current 2.5 percent.
Forecasts also indicate a 0.2 percent rise in the core CPI in
February, while on an annual basis the index may anchor at 2.3 percent.
If
the U.S. inflation data fell short of analysts’ projections, Fed rate cut odds
would rise.
On
March 18, the Fed will publish its latest economic projections, which includes
growth, inflation and employment outlook, in addition to forecasts regarding
interest rates path.
Last
week, the Fed surprisingly cut interest rates by 50 basis points, a move that
has not occurred since the global financial crisis, while vowed to announce stimulus
measures to support the economy.
According
to the CME's FedWatch tool on Tuesday, markets were seeing 73 percent chance
the Fed would slash interest rates by 75 basis points next week, with a
probability of less than 30 percent of seeing an interest rate cut by 100 basis
points.
A
strong concern is dominating investors as corona continues to spread outside
China, with the number of Coronavirus cases in the United States rising to the
top 500.
US
President Donald Trump on Friday renewed his call for the Federal Reserve to
cut interest rates further amid concerns about the impact of the new
Coronavirus (Coved-19) on the U.S. economy.
"The
Fed should cut (interest rates) and stimulate" the economy, Trump told
reporters at the White House, adding that "other countries are doing this
(lowering interest rates) and the Federal Reserve puts us at a competitive
disadvantage" by not lowering rates.
"Honestly,
we should have the lowest rate yet and instead pay more than other
countries." Other countries pay zero and less than zero," he added.
Trump also mentioned
that he would urge his administration to ask Congress to pass payroll tax
relief and other quick measures.