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Analysts are assessing the likelihood of rate hikes in March as CPI disappoints again
US consumer prices are still rising, with January recording the biggest year-on-year rise since 1982. Inflation problems are already priced into the market, analysts say, but interest rate hike speculation continues US consumer prices rose again in January, again showing the biggest annual rise in inflation in 40 years. In the 12 months through January, the consumer price index rose 7.6%, up from 7% in December, marking the largest year-on-year increase since 1982, according to the latest index audit report. Bitcoin and Ether lost 3.6% and 5.2%, respectively, immediately following the report's release before falling later Thursday morning...
Analysts are assessing the likelihood of rate hikes in March as CPI disappoints again
- Die US-Verbraucherpreise steigen immer noch, wobei der Januar den größten Anstieg gegenüber dem Vorjahr seit 1982 verzeichnete
- Die Inflationsprobleme sind laut Analysten bereits in den Markt eingepreist, aber die Zinserhöhungsspekulationen gehen weiter
US consumer prices rose again in January, once again showing the largest annual rise in inflation in 40 years. In the 12 months to January, the consumer price index rose 7.6%, up from 7% in December, the biggest year-on-year increase since 1982, according to the latest index Test report.
Bitcoin and Ether lost 3.6% and 5.2%, respectively, immediately after the report was released before rebounding later Thursday morning. Stocks also saw a slight decline at the open but mostly rose later in the trading session.
“U.S. stocks recouped most of the inflation-related losses as investors expect price pressures could peak just before the Federal Reserve's policy meeting in March,” said Edward Moya, senior market analyst at OANDA. “Two of the biggest pressures on inflation have been rising prices for accommodation and new vehicles, both of which appear to be improving over the next quarter.”
Economists expected January to rise 7.3%. This is the eighth time in the last 10 months that economists have underestimated inflation trends.
“[The CPI reading is] definitely higher than expectations and opens up the possibility of inflation accelerating — which is really bad,” said Joseph Wang, a former senior trader on the Fed’s Open Markets Desk.
“With some Fed presidents already on record opposing a 50 basis point hike, I don’t think that’s likely.”
Last week, Wang told Blockworks he did not expect such a rate hike in March, but one later in the year remains possible.
"I suspect they will be very aggressive - maybe a hike, every meeting, maybe even 50 basis points at a meeting in the future," Wang said.
The probability of a 50 basis point hike in March is about 27%, according to the data Fed fund futures. A 25 basis point increase is about 73% likely.
“The Fed has not started a rate cycle with a 50 basis point hike since at least 1990,” Nicholas Colas, co-founder of DataTrek Research, wrote in a recent note. “Such a move would therefore be very unusual, but Chairman Powell has repeatedly said that the current environment is different than in the recent past.”
It is difficult to speculate when interest rate hikes might begin, Wang stressed.
“The Fed hates to surprise the market, and current futures prices are too unclear,” Wang said. "I expect Fed spokespeople will come out in the coming days to clearly telegraph both ways. But they probably don't know what to do yet."
The next meeting of the Fed's Federal Open Market Committee is scheduled for March 15 and 16. A summary of the economic forecasts will also be published after the meeting.
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