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US inflation unexpectedly rose to 3% in January, slowly strengthening Federal Reserve lawsuits with interest rate cuts and a blow to stocks and government bonds.
Wednesday's consumer price index figures exceeded expectations of economists voted by Reuters. Reuters predicted that inflation would remain steadily at 2.9% in December.
The monthly rise in January was also better than expected, at 0.5% compared to the forecast of 0.3%.
The surge in egg prices contributed significantly to the increase, up 15.2% in one month and 53% in one year.
Labor Statistics Bureau figures bet on investors that investors would cut interest rates only once this year. Before the data was released, the futures market expected the first cuts to arrive by September.
“I think we're nearby, but it's not there. [yet] Federal Reserve Chairman Jay Powell told lawmakers Wednesday. “Today's inflation print says the same thing.”
Powell told a House hearing after the data was released: “We've made a lot of progress but we're not there yet. So for now we want to maintain policy restrictions.”
“The market is not sure we'll see divergence later in the year. Today's data certainly doesn't provide evidence of that,” said Eric Winograd, Chief Economist at Alliancebernstein. He stressed concerns that “the Fed will not cut interest rates at all if inflation does not continue to decline.”
After the data was published, the two-year yield on U.S. Treasury debt, which tracks interest rate forecasts and moves backwards to prices, rose 0.08 percentage points to almost 4.38 percent.
U.S. stocks have been significantly lower. The S&P 500 flowed 1.1%, but recovered ground, which fell 0.7% in the morning trade. The high-tech Nasdaq composites were 0.5% lower, while the dollar gauges for the other six currencies rose 0.2%.
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Wednesday's inflation data also showed that the core CPI, which removes changes in food and energy prices, rose to 3.3% in January, from 3.2% in December.
It came after the Fed defied a call from President Donald Trump, rushing to cut borrowing costs and instead held its main rate at 4.25% to 4.5%.
On Tuesday, Powell told Congress that the central bank will continue to “do our work and move away from politics.”
But on Wednesday, Trump updated his demands for his true social platform. “We need to lower interest rates. This is something we'll be holding hands with future tariffs!!!” posted by the US President. “Rock and roll, America, America!!”
CPI data has made the world's biggest economy surge once again as Trump plans to wipe out tariffs, crack down on immigration, and many economists are moving forward with plans for a major tax cut that could lead to new increases inflation It promotes concern among economists that it is.
Since returning to the White House on January 20th, Trump has begun implementing massive deportations of already undocumented immigrants, imposing a 10% tariff on Chinese imports.
He also announced that nearly all imports from Canada and Mexico, as well as all steel and aluminum imports, will be effective in March.
Powell says this depends on the details of taxation and is too early to determine the impact of tariffs on economic and monetary policy.
Whitney Watson of Goldman Sachs Asset Management said Wednesday's inflation figures are likely to bolster the Fed's “cautious approach to easing,” along with the robustness of the US job market. She added:
