Home » Summary丨Inflation rises more than expected and the outlook for the Fed to cut interest rates is uncertain – China Daily

Summary丨Inflation rises more than expected and the outlook for the Fed to cut interest rates is uncertain – China Daily

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Summary丨Inflation rises more than expected and the outlook for the Fed to cut interest rates is uncertain – China Daily

Inflation on the Rise: Uncertainty Surrounds the Fed’s Interest Rate Plans

Xinhua News Agency, New York, February 13

The U.S. consumer price index (CPI) has risen more than expected in January, posing uncertainty about the direction of the Federal Reserve’s monetary policy. Economists are now predicting that the Fed may cut interest rates in the future, but the likelihood and intensity of the rate cuts are in question.

Data released by the U.S. Department of Labor on the 13th revealed that the U.S. CPI increased by 0.3% month-on-month in January, marking the largest surge since September last year. Year-on-year, the CPI rose by 3.1%, surpassing the 2% long-term inflation target set by the Federal Reserve and exceeding market consensus expectations. Excluding volatile food and energy prices, the core CPI also saw a significant increase, rising by 0.4% month-on-month and 3.9% year-on-year, outpacing market expectations.

Following the release of the CPI data, tracking data from the Chicago Mercantile Exchange indicated that the market’s expectations regarding the Federal Reserve’s monetary policy shifted. The probability of the Federal Reserve maintaining interest rates at the March monetary policy meeting rose to over 90%, and the possibility of a 25 basis point interest rate cut in May fell to less than 35%. Bank of America Global Research suggested that the latest CPI data has heightened concerns about inflationary pressures due to tight labor markets, leading to a decline in expectations for interest rate cuts in the coming months.

Market analyst James Helchik pointed out that the uncertainty surrounding the Fed’s monetary policy has dampened sentiment in the stock market. As a result, the three major stock indexes in the New York stock market opened significantly lower on the 13th and continued to decline throughout the session.

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At the close of the day, the Dow Jones Industrial Average fell by 524.63 points to close at 38272.75 points, a decrease of 1.35%. The S&P 500 Stock Index dropped by 68.67 points to close at 4953.17 points, a decrease of 1.37%, while the Nasdaq Composite Index fell by 286.95 points to close at 15655.60 points, a decrease of 1.80%.

Senior portfolio manager Thomas Martin at Globolt Investment Company indicated that the stock market decline following the release of inflation data was an “instinctive reaction” among investors. He emphasized that although the latest inflation data is concerning, it is not expected to change the trend of cooling inflation.

The direction of the Fed’s monetary policy has now become more uncertain, leading to a cautious outlook for investors. With the stock market experiencing fluctuations in response to the latest economic data, all eyes are on the Federal Reserve and its upcoming decisions regarding interest rates.

[Editor in charge: Yan Yujie]

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