US, December inflation rises more than estimated. Fed Rate Cut Delayed?

USA: December inflation in the foreground.

The monthly CPI rose by 0.3% compared to +0.1% previously and forecasts of +0.2%.

Year-on-year inflation recorded a change of 3.4% compared to the previous 3.1% and an expected 3.2%.

Leaving aside fluctuations in food and energy prices, even the so-called Core CPI rose 0.3% and 3.9% month-on-month from a year earlier, compared with respective estimates of 0.3% and 3.8%

US inflation accelerated in December mainly as Americans paid more for housing and cars, defying investors’ bets that the Federal Reserve will cut interest rates soon.

Data from the Bureau of Labor Statistics showed an increase in housing, electricity and motor vehicle insurance. Used car prices rose for the second month running.

Treasury yields and the dollar rose, while stock index futures fell after the report. The next meeting of Fed officials is scheduled for the end of this month.

“These numbers are not bad, but they show that the process of disinflation is still slow and unlikely to fall directly to 2%”commented Seema Shah, Global Chief Strategist at Principal Asset Management. “Certainly, as long as core inflation remains stubbornly high, the Fed will continue to reject the idea the upcoming rate cut“.

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