Expectations for the Next Fed Rate Cut Get Pushed Back after High Inflation Report

A much higher-than-expected wholesale inflation reading for February had traders contemplating the possibility that the Federal Reserve will not be lowering interest rates at all this year.

Following a Bureau of Labor Statistics (BLS) report that the producer price index posted its biggest gain in a year, futures markets took any realistic chance of a cut off the table until at least December.

Even then, odds of a reduction at the final Fed meeting of the year fell to about 60 percent as persistently higher inflation — brought on by tariffs, the Iran war and elevated services costs — will keep the central bank on hold. The PPI report came just hours before the Federal Open Market Committee was to release its latest interest rate decision.

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