USD: An uncomfortable press conference for Powell Another day and another above-consensus US inflation release. Yesterday it was the turn of the 1Q24 Employment Cost Index to surprise on the upside and return to levels last seen a year ago. Interestingly, it seems like a lot of the rise was driven by compensation in the public sector - a topic that touches on what the next US administration will do with the 2025 expiration of the Tax Cut and Jobs Act (TCJA). The high 1.2% quarter-on-quarter ECI figure has now seen the pricing of this year's Federal Reserve easing cycle narrow to just 29bp. Two-year US swap rates are closing in on the cyclical highs seen last October. And the late 2023 disinflation story feels like a dream. It will be in this context the FOMC releases its statement at 2000CET today and Fed Chair Jerome Powell will hold a press conference at 2030CET. As we note in our Fed preview, the dollar has ended the day lower after the last three FOMC meetings. Today, however, Jerome Powell will have to acknowledge that US price trends have reversed higher, activity is holding up well and that any easing this year will have to be delayed. And at the moment it is hard to argue against the market pricing out the one last 2024 Fed cut at some stage soon.