Hot inflation reading reinforces the Fed’s cautious approach to rate cuts in 2024
Fed officials have been warning that more time is needed before rate cuts can begin. A hotter-than-expected inflation reading Tuesday reinforced that cautious view.
Investors are starting to listen. Markets are now pricing in a nearly 80% chance the Fed cuts rates in June, dialing back previous bets the central bank would begin cutting rates in May.
That shift followed an announcement Tuesday from the Bureau of Labor Statistics that the Consumer Price Index (CPI) rose 0.3% over last month and 3.1% over the prior year in January.
Both measures were higher compared to economists’ forecasts. On a “core” basis, which strips out the more volatile costs of food and gas, prices in January climbed 0.4% over the prior month and 3.9% over last year.
