The 0.45% m/m increase in core CPI in January will, after the spike at this time last year, add to the impression that the price data have a residual seasonality problem. Assuming the producer price data come in a little hot tomorrow too, we estimate that core PCE prices increased by 0.39% m/m last month, which would only be slightly smaller than the 0.50% increase a year earlier, leaving the annual core PCE inflation rate at a still-elevated 2.7%. That lends support to our view that, with President Trump threatening to impose wide-ranging inflationary tariffs, the Fed won’t resume cutting interest rates this year.
Subscriber content
Read this in full, free
Start a free trial and use one of your 10 free starter credits to unlock this piece.