US inflation rises unexpectedly to 3% in January
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The news: US inflation saw a hotter than expected reading for January, adding to speculation that the Federal Reserve may put the brakes on interest rate cuts.
The numbers: The figures from the US Bureau of Labor Statistics saw the core Consumer Price Index (CPI) (excluding food and energy) rise 3.3% year on year. Headline CPI climbed to 3% year on year.
The context: The headline CPI increased 0.5% on the month, making it the biggest rise since August 2023, and exceeded expectations which had predicted a 0.3% month on month increase.
US government bonds and stock futures saw a sharp sell-off on the news, while the US yield curve shifted up 10 basis points across most maturities.
What they said: Whitney Watson of Goldman Sachs Asset Management told Bloomberg that this print “is likely to further cement the FOMC’s cautious approach to easing. A resilient labor market also provides scope for patience. We think the Fed is likely to remain in ‘wait and see mode’ for the time being and anticipate the Fed staying on hold at next month’s meeting.”
The source: US Bureau of Labor Statistics CPI figures
