The Fed’s only possible reason to raise rates is vanishing

The Fed’s June rate hike is suddenly sliding off the table.

Market expectations for a June interest rate increase from the Federal Reserve have fallen to just 47%, down from 66.5% only a week ago, according to Bloomberg’s World Interest Rate Probability data.

What happened? The main justification for the central bank’s stated desire to push interest rates higher, the possibility that inflation was finally moving higher, suddenly disappeared as consumer prices fell in March for the first time in over a year. Core prices, which exclude food and energy costs and are closely watched by Fed officials, also slipped 0.1%, making for their first decline since January 2010.

At the same time, US retail sales, a key barometer of growth for an economy two-thirds reliant on consumer spending, fell for a second straight month.

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