US inflation surprised to the upside in January. The economists of Commerzbank analyze the implications of a possible downward shift in interest rates by the Federal Reserve (Fed).
Reversal in the disinflationary trend
Consumer prices in the United States rose 0.3% in January compared to the previous month, slightly more than expected. The year-on-year rate fell from 3.4% to 3.1%. The more important underlying rate, which excludes energy and food, even rose 0.4% in the previous month, also slightly above expectations. The year-on-year comparison remained at 3.9%.
The unexpectedly high rise in CPI in January is likely to encourage the Fed to wait to see how prices develop before declaring victory over inflation.
Some observers will now wonder whether the interest rate cut that was firmly planned for May will also begin to falter, especially given that the real economy has so far been very robust. In any case, we had already considered a reduction in March premature.
As for May, before evaluating the Fed's policy we should wait to see how inflation measured by the PCE index has evolved in January and whether the greater pressure on prices also manifests itself in February.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
