Fed rate hike risk rises on hotter inflation

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It seems that inflation in the United States is heading in the wrong direction, causing some economists that the US Federal Reserve may end up walking long.

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The main inflation increased by 3 percent yearly in January, according to the Consumer Prices Index at the US Labor Office (CPI), which was higher than the expectations of analysts of 2.9 percent.

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This was the fourth increase after the consumer price index reached the lowest level in the post -item phase 2.4 percent in September.

The markets reduced their cut -off bets in half to only one by the Federal Reserve in 2025, after issuing the hottest data expected.

Some economists said that the feverish numbers were due to the seasonal effects because many companies implement prices at the beginning of the year.

Others say the numbers indicate the general trend of high costs.

This will lead to the concerns of Americans, but the Canadians must also bother them because the highest interest rates in the United States may continue to push the Canadian dollar to a decrease in its counterpart in the United States. UNHPU is used to determine the costs of borrowing for mortgages in Canada.

Here are what economists believe that inflation data concerns them for the Federal Reserve Bank and its future path on interest rates.

Risk risks: Montreal Bank

“Not much about the CPI report in January today,” Scott Anderson, the chief American economist at Montreal Bank. “The moderation we saw in the consumer inflation last summer is no longer visible now.

He said that inflation in the United States seems to have been re -chained after the federal reserve interest rates were reduced by a total of 100 basis points late last year, so “the formation of fingers will lead to price discounts to intensify, and the market pressure will be based on the Federal Reserve to stay in a suspension. For a large period of time before thinking about other pieces.

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Data carries it.

The annual essential inflation for three months, which excludes food and energy, was 3.8 percent, while the superior inflation, which measures the costs of services minus energy and shelter, was 5.3 percent, which is much higher than the goal of the FBI.

Federal Reserve Speaker Jerome Powell said on Tuesday the US Senate Committee that he was not in a hurry to reduce prices. He repeated that letter on Wednesday during his testimony to the Financial Services Committee of the House of Representatives.

Anderson said that the latest consumer price index data raises that message, given that it seems that the Federal Reserve is now dealing with a “real offer to inflation pressure.” “The risk of high interest rates, although it is still low,” rises. “

Rosenberg Research

David Rosenberg, founder of Rosenberg Research & Associas Inc. said. In a note: “The bond and papers market will not love this first thing, nor will the Federal Reserve – with the presence of upper falcons.”

He pointed out that the evidence of inflation was widespread, despite the strong US dollar. For example, the prices of used cars and insurance increased, as well as the costs of the limbs and entertainment service, as well as food and medicine prices.

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Rosenberg said there are signs of shrinkage in some parts, but those that only represent a smaller piece of consumer price index.

“Keep in mind that all of this happens before the effects of the tariff,” he said.

US President Donald Trump is currently enjoying a strong consent, which Rosenberg believes will encourage him to move forward with tax cuts, which poses another risk to inflation.

He said: “Therefore, with all this in mind, one can no longer reject the possibilities that are not limited to the federal reserve now indefinitely, but the next step could be an increase in prices.” “My basic condition is not, but the possibilities are now barely trivial and just have moved in today’s report.”

Hanging prices for 2025: capital economics

“It is clear that inflation … is no longer declining decisively,” said Paul Ashworth, the chief economist in North America at Capital Economics Ltd.

With the Trump threat tariff, which is an inflationary, the economist believes that the Federal Reserve will carry interest rates for the rest of the year.

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Ashworth appreciates the latest consumer price index data, as well as the release of the product price index tomorrow, you will leave the preferred inflation scale of the Federal Reserve – Personal Consumption Expenditure Index – higher than policymakers.

He said: “The result is that the markets are now pricing only in one of 25 Basis by the Federal Reserve this year.” “We still think this is very matter,” and that the cuts are “outside the table” in 2025.

• Email: gmvsuhanic@postmedia.com

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