Stocks slide into the weekend after sentiment, inflation data: Stock market news today

Fed’s Bowman teases ‘future rate increases’ if inflation elevated

With markets pricing in a pause in the Federal Reserve’s rate hiking campaign next month, Fed governor Michelle Bowman said Friday inflation data hasn’t yet made it clear the Fed is done raising rates for this cycle.

“I will look for signs of consistent evidence that inflation is on a downward path when considering future rate increases and at what point we will have achieved a sufficiently restrictive stance for the policy rate,” Bowman said in a speech in Germany.

Recent inflation data, in Bowman’s view, does not meet this bar.

On Wednesday, the Consumer Price Index (CPI) for April showed headline inflation rose 4.9% over last year while “core” prices — which strip out the more volatile costs of food and energy — rose 5.5%.

Writing in a note to clients on Wednesday, Rick Rieder, BlackRock’s CIO of global fixed income, said the CPI print “continues to depict inflation that is just too high for most people’s good, especially the Federal Reserve’s.”

“In fact,” Rieder added, “the report showed that inflation remains remarkably sticky, which doesn’t correspond to virtually any practical thinker’s timeline of when inflation might be expected to start to come down further.”

At 4.9%, annual inflation rose at its slowest pace in two years; core inflation’s annual change was unchanged from March. And with the Fed targeting 2% inflation, on average, the more time price increases linger at more than double that rate, the less compelling a shift in the Fed’s policy stance becomes. At least to the Powell Fed.

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