Fed looks more split

By contrast, the Federal Reserve seems more split. Whilst Federal Reserve Chairman Jerome Powell seems to continue to advocate for a June rate cut, and the Fed’s official forecast is for three 0.25% cuts to its feds funds rate in 2024, some individual members have diverged from the official script. 

On Tuesday, Federal Reserve Bank of Atlanta Governor Raphael Bostic said the Fed should take things slowly and that he now only expected one rate cut in 2024. 

His view echoed those of his fellow Fed member of the board of governors Lisa Cook, who advocated for the Fed taking a “careful approach” to easing over time to “ensure inflation returns sustainably to 2.0%.” 

She mentioned housing inflation, which remains quite high, though her view was that it would fall on lower rental demand. 

On Monday, Chicago Fed President Austan Goolsbee said the persistence of housing inflation continued to surprise him, but that he felt it would ebb away over time.

"The main puzzle has been about housing," Goolsbee said, a major component in the consumer spending basket that has accounted for a large share of recent headline inflation readings, according to Reuters. 

In terms of US inflation, Friday’s Core Personal Consumption Expenditures (PCE) Price Index data for February, considered the Fed’s preferred gauge of inflation, is being held up as the next oracular event for determining when the Fed could cut interest rates. 

A higher-than-expected inflation reading in line with most recent gauges of inflation in the US could push back further the time when the Fed is expected to cut interest rates, with negative consequences for EUR/USD