Home » Summary丨Inflation rises more than expected and the outlook for the Fed to cut interest rates is uncertain_China Net

Summary丨Inflation rises more than expected and the outlook for the Fed to cut interest rates is uncertain_China Net

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The U.S. consumer price index (CPI) rose more than expected in January, increasing uncertainty about the direction of the Federal Reserve’s monetary policy. Economists predict that the Federal Reserve may cut interest rates later, and the intensity of the rate cuts may also be reduced.

Data released by the U.S. Department of Labor on the 13th showed that the U.S. CPI rose 0.3% month-on-month in January, the largest increase since September last year; it rose 3.1% year-on-year, well above the 2% long-term inflation target set by the Federal Reserve and also higher than the market consensus.

A tracking data from the Chicago Mercantile Exchange shows that after the above-mentioned CPI data was released that day, the market expected that the probability of the Federal Reserve maintaining interest rates at the monetary policy meeting in March this year rose to more than 90%; it was expected to cut interest rates by 25 basis points at the May meeting. The probability dropped to less than 35%, while the probability of maintaining interest rates exceeded 60%.

Bank of America Global Research said that day’s CPI data further strengthened concerns about inflationary pressures caused by tight labor markets. The possibility of the Federal Reserve cutting interest rates in March and May has declined, and it is expected to start cutting interest rates in June. After the data was released, market expectations for the Fed’s interest rate cut in 2024 also decreased.

Casey Jones, head of fixed income business at US brokerage firm Charles Schwab, believes the Fed will view the latest CPI data as a reason to wait until May or June before cutting interest rates.

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Market analyst James Helchik said the direction of the Fed’s monetary policy has now become more uncertain, which has led to a dampening of sentiment in the stock market. Some investors expect the U.S. 10-year Treasury yield to rise above 5%, with technology stocks that have driven the stock market’s recent gains significantly affected.

The three major stock indexes in the New York stock market opened significantly lower on the 13th, continued to weaken during the session, and fell significantly at the close.

As of the close of the day, the Dow Jones Industrial Average fell 524.63 points from the previous trading day to close at 38272.75 points, a decrease of 1.35%; the S&P 500 Stock Index fell 68.67 points to close at 4953.17 points, a decrease of 1.37%; Nasdaq The Gram Composite Index fell 286.95 points to close at 15655.60 points, a decrease of 1.80%.

Thomas Martin, senior portfolio manager at Globolt Investment Company in the United States, said that the stock market decline after the release of inflation data was an “instinctive reaction” among investors. Although the latest inflation data is somewhat worrying, it will not change the trend of cooling inflation. overall direction.

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