Jump to content

US January inflation preview: further slowdown in price growth keeps rate cut hopes alive


Recommended Posts

This month’s consumer price inflation (CPI) is expected to show a further slowing of inflation pressures, but a March rate cut is still very unlikely.

US flagSource: Bloomberg
 

Written by: Chris Beauchamp | Chief Market Analyst, London
 
Publication date: 

Price growth to slow

Consumer price inflation (CPI) is projected to slow in January when the data is released on 13 February, bolstering the Federal Reserve's (Fed) view that cuts will happen this year, though it is unlikely to do much for hopes of a March rate cut.

The headline CPI rate (year-over-year) is expected to dip below 3% for the first time in nearly three years (since March 2021). Most of that deceleration should come from retreating energy prices and a further slide in food inflation.

Home rents drive core inflation

Core CPI, excluding food and energy, is expected at 3.8% year-over-year in January, down slightly from December's 3.9%. But a disproportionate share of that increase still stems from higher home rents. Shelter cost growth will keep slowing as lower market rents gradually pass through into leases. Price increases for goods have fallen back to around zero, as the impact of severe global supply chain strains earlier continues to ease.

Markets are no longer expecting any action from the Fed in March, and even weaker inflation is unlikely to push the chance of a March cut much higher. The CME Fed Watch tool shows just a 15% chance of a March cut, down from 77% a month ago:

CME chartSource: CME Fed Watch

In January, the CPI report is expected to show a moderation in inflation, which could instil confidence among economists. The decline in energy prices and a slowdown in food inflation are likely to contribute to a reduction in the overall inflation rate. However, the persistently high rent increases may prevent a significant drop in the "core" CPI, which excludes food and energy. Core inflation measures are important indicators for policymakers as they provide insights into future price trends.

The upcoming inflation data will be crucial for financial markets, as they hope for relief from the Fed's benchmark interest rate, which has remained at a 23-year high since July. The Fed's rate hikes, initiated in March 2022, were aimed at curbing inflation but led to interest rates on various loans reaching multi-decade highs.

Market participants are eagerly looking for signs of a substantial slowdown in inflation to bolster expectations that the Fed might pause or even reverse some of its aggressive tightening measures. If there is more evidence indicating that underlying price pressures are easing, it could reassure investors that the central bank will not need to maintain restrictive interest rates for as long as previously anticipated.

 

 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • Crypto trading is a bit complicated when it comes to understanding the dynamics in profit making. Some people are more inclined to technical analysis which of course has been the widely used trading tool but some are more inclined to fundamentals but sticking to fundamentals alone could be highly risky in my own opinion even though crypto is also financial instrument that often respond to news updates.  A blend of the two could provide a safety net for traders in minimizing losses compared to potential profit. The above case scenario is largely attributed to perp futures trading and other derivatives. TA and FA could also be very useful for spot trading but I feel timely listing of projects could largely determine one's profit from investing in a project. These may not be for all projects cos some are **** coins. This could be a personal perspective but I have noticed listing speed is also another important factor to consider along with project fundamentals when trading and if we are to include listing speed as a factor for choosing trade then it will affect our choice of trading platform cos some are more inclined to top cap projects while others are more inclined low cap gems.   My experience with ORDI has proven this trading skill rewarding. ORDI was first listed on Bitget before other exchange joined the listing party after it saw rapid adoption reflecting in it significant MCap growth. This chart should give us a glimpse of my experience with this strategy.
    • In a stunning display of market momentum, the PANDORA token, the first of its kind, has skyrocketed an astonishing 4872% from its introduction on February 2nd to February 7th. This remarkable performance has not only caught the attention of cryptocurrency enthusiasts but has also solidified PANDORA’s position as a groundbreaking asset in the digital currency landscape. Pandora's ERC-404 protocol revolutionizes the token landscape by seamlessly blending the qualities of ERC20 and ERC721 standards. This experimental mixed implementation enables persistent liquidity and non-fungibility for NFTs, unlocking a realm of possibilities previously unexplored. Adding to the excitement, Bitget Wallet is gearing up to introduce a specialized section dedicated to ERC-404 token market listings. This feature creates a hub for tokens that blend the best of both worlds—the liquidity of ERC-20s and the uniqueness of ERC-721 NFTs. I have come to believe that, the electrifying surge of PANDORA token and the innovative ERC-404 standard is not just a fleeting trend but a window into the future of cryptocurrency.
    • A significant turning point in the #PORTALxBitget collaboration is the listing of $PORTAL on Bitget through the Candybomb event, which opens up benefits and synergistic prospects like 1. Diversified Trading choices: Users now have access to a wide range of trading choices thanks to $PORTAL's listing on the exchange, including cutting-edge leveraged trading capabilities and spot trading. This gives customers the freedom to interact with $PORTAL in a way that suits their preferred level of risk and trading techniques. 2. Community Synergy: By uniting the exchange users and the pre-existing $PORTAL community, the Candybomb event stimulates community engagement. Through this synergy, a positive environment surrounding #PORTALxBitget may be developed, encouraging cooperation, information exchange, and sustained interest in the project. Could this recent collab stimulate the  stage for a fruitful and mutually beneficial relationship between #PORTAL and exchange.
×
×
  • Create New...
us