A key metric used by the Federal Reserve to gauge inflation rose in January, but that didn’t come as a surprise to economists. The personal consumption expenditures price index was up 2.4% from a year ago, with an increase of 0.3% for the month, just as forecasters had expected. This indicates that prices still remain above levels that would precipitate a quick interest cut.
“Today’s print comes as no surprise following the CPI and PPI inflation reports earlier this month,” said Damian McIntyre, portfolio manager at Federated Hermes. “Inflation continues to fall gradually, while economic growth is strong and the consumer is healthy. Higher-for-longer rates will likely stay with us until summer.”
Additionally, personal income rose 1%, which was significantly higher than the expected 0.3% gain. Spending, on the other hand, went the other way—it fell 0.1% when a 0.2% gain was anticipated.
“Overall, with inflation still running above target, strong economic data and overall loosening of financial conditions, the (Fed) is unlikely to drastically revise its projections of three rate cuts for this year,” said Morgane Delledonne, head of investment strategy, Europe, at GlobalX.
