The Fed's efforts to lower inflation seem to have encountered not a small pit, but a real roadblock, and the market has to reflect on this year's interest rate cut forecasts.

Recent report shows that the core inflation rate exceeded economists' expectations for the third consecutive month. The core CPI increased by 0.4% month-on-month and 3.8% year-on-year. The increase was the same as the previous month.

Futures market prices show investors believe fewer than two rate cuts are likely this year. Although the dot plot shows a slim majority of Fed officials predicting three interest rate cuts this year, stagnant progress in reducing inflation may not only delay the timing of interest rate cuts, but may even limit the ability to cut interest rates.

Even if the inflation rate can drop to a more reassuring level next month, judging from the cautious remarks of Federal Reserve officials, a rate cut in July may be reluctant, when the U.S. election will begin to affect the Federal Reserve's decision-making.

Some economists have begun to believe that if there is no interest rate cut in June or July, the Federal Reserve may not lower interest rates until 2025. Because inflationary pressure has cooled rapidly at the end of last year, it is difficult for the year-on-year increase in CPI to slow down in the second half of this year. 

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