Market trim FRD rate reduction bet following Hot Inflation Report
A higher than expected inflation reading in early 2025 is much more likely to make the Federal Reserve hold off and strengthen foreseeable future interest rates. Warning stance From Federal Reserve Chairman Jerome Powell and other central bank policymakers.
rear Latest data The Bureau of Labor Statistics has shown that the January Consumer Price Index (CPI) has increased more than expected.
“If things go well, we’ll push our timeline up to the second half of the year,” Claudiatherm, the chief economist and former Fed economist, told Yahoo Finance.
On a “core” basis, which removes more volatile costs of food and gas, prices in January rose 0.4% from the previous month. This is the largest monthly increase since April 2023, exceeding 0.2% of each month in December.
Core CPI prices also rose 3.3% last year, up from 3.2% seen in December.
Fed officials had already predicted a cautious attitude in 2025 before reading today.
In December, they predicted two cuts for all 2025, downgraded previous estimates due to concerns about the uncertain pathways of inflation and the impact of economic policies from the new Trump administration.
Powell strengthened his views by appearing before the senator on Tuesday.
“Our policy stance is far less restrictive than ever and the economy remains stronger, so there’s no need to rush to adjust our policy stance,” Powell said.
But he could see increased pressure on Powell as some economists navigate trade policies from the Trump administration, which predict political demands for interest rates to fall from both sides of the aisle.
President Donald Trump In a social media post on Wednesday Although the rate was asked to be lower, he did not specify whether he was talking about the Fed’s short-term fees or long-term borrowing costs.
“We need to lower interest rates. What to do with future tariffs!!! Rock and Roll, America!!!” he posted.
In another post, he said, “Biden Inflation Up!”
Meanwhile, Democrat Elizabeth Warren, a ranking member of the Senate Banking Committee, told Powell she wanted to cut the fees at the next Fed meeting in March.