Analysts at Wells Fargo see one more interest rate hike coming from the Federal Reserve, following Wednesday’s US Consumer Price Index report. According to them, inflation remains too hot for Fed’s liking. 

Key quotes: 

“The core CPI has been above 5% on a year-over-year basis for 16 consecutive months, and over the first three months of 2023, core consumer prices have risen at an equally hot 5.1% annualized rate. This is not to say there has been no progress towards taming inflation. Energy prices have outright fallen over the past year, food inflation is slowing and prices for certain goods that surged during the pandemic, such as used vehicles, have declined. But, directional progress should not be confused with mission accomplished.”

“We expect another 25 bps rate hike from the FOMC at the conclusion of its next meeting on May 3.”

“We think the May 3 rate hike will be the last of the tightening cycle. Our view is that the FOMC will hold the target range for the federal funds rate at 5.00%-5.25% for the foreseeable future in order to assess the effectiveness of their accumulated policy tightening.”