** Major brokerages including Goldman Sachs, Deutsche Bank keep their expectations of Fed's first rate cut unchanged following Friday's largely in-line U.S. inflation data
** Personal consumption expenditures (PCE) - preferred measure of inflation - price index increased 0.3% last month, in line with Reuters poll, data showed on Friday
** In 12 months through March, the index rose 2.7% vs. 2.6% expected
** Goldman Sachs continues to expect the Fed delivering cuts in July and December in this year, while Deutsche Bank expects only one cut in December
** GS says upside surprises in inflation data in the last three months reflect "lagged catch-up rather than current cost pressures"
** Adds the "key pillars of the disinflation narrative remain intact"
** Meanwhile, Deutsche Bank expects elevated inflation data to lead to more hawkish messaging at the FOMC meeting starting Tuesday, with the FOMC statement likely to suggest it will take longer to gain confidence about disinflation
** Barclays economists, while maintaining a September rate-cut forecast, echo a similar position that Fed chair Jerome Powell would mention that recent inflation data suggests it would likely take longer than expected for FOMC to achieve that "greater confidence"
** "Powell's remarks will suggest fewer rate cuts this year than the three 25bp cuts indicated by the median dot in the March SEP," Barclays adds
** A Reuters poll of 100 economists this month showed majority of them expect Fed to wait until September to cut its key interest rate, with half of them saying there will be only two cuts this year
(Reporting by Kanchana Chakravarty in Bengaluru)
((Kanchana.Chakravarty@thomsonreuters.com))
