January inflation offers more reasons to keep interest rate cuts

Annual inflation rose to 3% in January, rising above expectations, giving the Federal Reserve further reason to slow interest rate cuts.

Inflation rose 0.5% each month, slightly exceeding expectations; An increase of 0.4% last monthAccording to the Consumer Price Index (CPI), Released by the Bureau of Labor Statistics (BLS). The core CPI, which excludes food and energy, rose 0.4% in January, and appeared at the same level as the December increase. This marked the year-on-year ratio of 3.3%.

Shelter costs rose 0.4%, being the most important contributor to the monthly increase in January, accounting for almost 30% of the monthly increase for all items. Gas rose 1.8% in a month. Food prices continued to rise, up 0.4% last month. The Food at Home Index rose 0.5%, primarily driven by the rising costs of eggs, and rose 15.2% in January.

“An unexpected acceleration of inflation marks the third consecutive monthly increase in the consumer price index, extending the trend of reflection since the second consecutive flat months of the May and June 2024 indexes “We will,” Chief Investment Officer of Plante Moran Financial Advisors, in a statement. “Inflation has accelerated against the backdrop of solid demand, a reality that could surprise consumers who remember the surge in Covid-19 ERA prices very well.

“President Trump’s proposed import duties will also sell more severe sales than he would have during his first term, where both inflation and interest rates are very low,” Baird continued.

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Fed will suspend further rate reductions

The increased inflation, coupled with stable job markets and economic growth, has given the Federal Reserve more room for work.

Federal Reserve System Interest rates from 4.5% to 4.75% In January, it was spurred by strong economic indicators that had more room to wait for central banks. Federal Reserve Chairman Jerome Powell said the central bank intends to remain cautious about additional interest rate cuts as long as the job market is strong and prices continue to rise.

“To daze evolving trade policy creates something important to Fed policymakers. “Even bearish predictions are far from the stagflection environment of the 1970s, but the playbook is It still seems to apply.

“Arresting inflation, at the expense of near growth, is likely to remain a priority for the Fed,” Baird said. “The fear of ununderstopping inflation expectations is too much for policymakers to ignore.”

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The higher the wallet is, the higher the higher

According to Charlie Wise, all indications show that they are holding interest rates that last longer. , Senior Vice President of Research and Consulting at Transunion.

“Consumers should avoid building and carrying large credit card balances, particularly in light of the very high interest rates on this type of debt, and, wherever possible, they should be more than the monthly minimum on their cards. You should pay more,” Wise said in a statement.

Additionally, Wise will refinance existing debts for more affordable loans as the rates ultimately drop to a more manageable level to ensure consumers closely monitor their credit profiles and keep them in the best possible form. I advised that I was ready.

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