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Brief of diving:
- Consumer prices increased last month at an annual rate of 3%, higher than expected and larger since June, according to a government report published on Wednesday, shortly after President Donald Trump asked the Federal Reserve to reduce the reference interest rate.
- An increase of 0.4% of the costs of the shelter in January fed 30% of gain In the Consumer Price Index, the Labor Statistics Office reported. Grocery prices also increased inflation, increasing 0.5% during the month to a large extent due to a jump of 15% of egg prices.
- President Fed Jerome Powell, Testifying to the Chamber’s Financial Services Committee WednesdayHe reduced the apparent mishap of the efforts of policymakers to curb inflation until his 2%goal. “Reading the CPI was above almost all of the expected, but it would only offer a precautionary note on this,” he said. “We don’t get excited about one or two good readings, if we don’t get excited about one or two bad readings.”
Divide vision:
TThe unexpected increase in price pressures promoted merchants in future interest rates to increase the probability that the Fed will maintain the federal fund rate in its current rank between 4.25% and 4.5 % beyond a meeting in May.
Traders on Wednesday recorded 88% chance of this result compared to 78% on Tuesday, according to Tuesday, according to The CME FEDWATCH tool.
“This is a hard inflation report to achieve, while the White House seeks more rates with the consumer inflation expectations that increase.” Scott Helfstein, head of investment strategy for Global X Asset Manager, said in an email.
Consumers’ expectations for inflation per year increased to 4.3% this month than 3.3% last month, “the highest reading since November 2023 and to mark two consecutive months of unusually increase High ”, Joanne HSU, director of the The Michigan University Consumer Surveysaid on Friday.
“Many consumers seem concerned with high inflation to return next year,” HSU said, saying that rates will increase prices.
Powell, who reiterated the testimony of a Senate group on Tuesday, said that the Central Bank is in no hurry to reduce the federal funds rate due to the labor market force and a solid economic growth.
The FED took a monetary pause last month after cutting the main rate at a full percentage point from September to December. Political officials said that inflation, although the slowdown of a maximum of four decades has not yet returned to its 2%goal.
“We are near, but there is no inflation and you have seen the impression of inflation today, which says the same,” Powell testified on Wednesday. “We want to keep policy restrictive for now.”
Trump, writing on social media, asked policymakers Press with monetary flexibility.
)Interest rates must be lowered, which would go hand in hand with nearby rates !!! “Trump said.
While campaigning last year for a second term, Trump left the precedent established by the presidents for several decades saying it should Have a “saying” about monetary policy.
Powell, along with democratic legislators in sight, defended FED’s independence, promoting the idea that the executive branch should influence the decisions of the Central Bank.
“Research for many, many years and many, many jurisdictions shows that some degree of independence is very important in maintaining inflation under control,” Powell said.
“The connection is obvious,” he said. “If politicians will want to be re -elected and things like that, they will not focus on the long term.
“We have the mandate to keep us apart from all this, to be out of all this,” Powell said.
In turn, Powell during the hearing repeatedly refused to comment on the rates recently announced by the Trump administration.
“The Fed has no role in fixing the rates and we do not comment on the decisions made by those who have this authority; we try to fulfill ourselves with our own fabric,” he said.
