The latest US CPI data showed us that the headline rate for prices rose 6.4% in January – a small slowdown from the prior month but higher than economists had predicted. The core annual figure came in slightly stronger than expected, but still lower than the prior readings. Meanwhile, monthly prints met the consensus estimates.
A core reading of 0.4% would still be too high for the Fed, whose inflation target was 2%.
Economists estimate that a rise of approximately 0.17% over time is required to reach this goal.
A bumper US jobs report had stoked fears of stronger-than-expected numbers all round. So the data does suggest a slowing at least in the falling price pressures that we have seen over the past few months from last year’s high above 9%.
The “super core” number which excludes housing and is Powell’s key variable, remains uncomfortably high and is consistent with another couple of smaller rate hikes. The tight labour market could continue to worry, while the seasonal adjustment will likely be moderately inflationary.
DXY stuck in a range
After some initial selling of the greenback right after the data, USD recovered all intraday…