With retail sales up 5.6% year-on-year, robust US consumer activity adds to doubts over the pace of likely rate cuts this year.
There was solid December retail sales in the US whose value increased 0.6% over the month, against forecasts of 0.4% growth. It was not only basic essentials seeing a boost but bigger ticket items such as autos showed strong demand, rising 1.1% in December. On a year-on-year basis, retail sales rose by 5.6% in December, the biggest rise in nearly a year. This level of spending does not indicate any consumer retrenchment and puts further pressure on the Federal Reserve (Fed) to remain hawkish.
Good times economically speaking may be painful for the rate doves’ positioning, who had collectively expected a slowing economy to propel the Fed into sooner rate cuts. We are not there just yet.
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