Fed remains cautious on cuts even as data improves

WASHINGTON, May 16 - Data this week offered the U.S. Federal Reserve good news on two fronts but policymakers haven't openly shifted views yet about the timing of rate cuts investors are convinced will start this year.

In comments on CNBC on Thursday, Richmond Fed President Thomas Barkin said the April retail sales number still means spending was growing at a"good" pace even if not a"great" one, noting that firms particularly in the service sector tell him they continue to plan price increases.

Like other policymakers, however, Mester said that was not her base case, and the April Consumer Price Index report was the first in four months that arguably boosted policymakers' faith that the drop in inflation seen last year might resume and become steady enough to bring their 2% inflation target within reach.

Indeed, the flow of data between now and the Fed's upcoming meetings leaves officials with a narrow window to build the case for a rate cut before the central bank's September 17-18 meeting - the current betting favorite among investors in contracts tied to the Fed's policy rate.

Source: Financial Digest (financialdigest.net)

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