Why Arvind Sanger believes the US Fed might delay rate cuts for longer

Nearly half of traders, at around 45%, expect the Federal Reserve to keep interest rates unchanged in June as well.

"My sense is that this (March) meeting may not resolve that (rate) decision.  They may stay pat on three rate cuts for the year. But the tendency, in my opinion, is to stay at these levels longer. And, therefore, June is becoming a question mark, because whether the Fed signals in this March meeting that they're going to stay pat for longer or not, the data is what is driving that fear," he noted.

: Manulife's Rana Gupta says three US Fed rate cuts already priced in

US inflation data released last week indicated an uptick in consumer prices for February, with a monthly increase of 0.4% and an annual rise of 3.2%, exceeding predictions.

Also Read: US inflation up again in February in latest sign that price pressures remain elevated

Excluding volatile food and energy prices, or "core" prices also climbed 0.4% from January to February, matching the previous month’s increase and a faster pace than is consistent with the Fed's 2% target.

Core inflation is watched especially closely because it typically provides a better read of where inflation is likely headed.

Economists at Goldman Sachs March 17 revised their forecast for Fed monetary policy to call for three quarter-point interest-rate cuts this year instead of four, because of the slightly higher inflation path.

The economists, led by Jan Hatzius, continue to expect the first rate cut in June, four cuts in 2025 and a final one in 2026, leaving their forecast for terminal rate unchanged at 3.25%-3.5%.

Also Read: Fed swaps are pricing in less than 50% chance of a rate cut in June

For the entire interview, watch the accompanying video