Jerome Powell indicated more than once that he aimed to reduce inflation to 2% (Getty)
Market expectations for the imminent start of a US interest rate cut took a hit on Tuesday after US inflation readings came in higher than expectations.
A US Department of Labor report showed that the consumer price index rose 0.3% on a monthly basis last January, which is more than the 0.2% rise expected by economists polled by Reuters.
On an annual basis, the index rose 3.1%, compared to an expected increase of 2.9%.
Excluding the volatile food and energy components, the core reading rose 0.4% on a monthly basis in January, compared to an expected rise of 0.3%.
On an annual basis, the index rose 3.9%, versus a 3.7% increase expected.
36 days before the US Federal Reserve meeting to report on interest rates, the markets still expect by 91% that the US Central Bank will keep rates at their current level in the range of 5.25% and 5.5%, according to the “FedWatch” index.
Markets expect the US interest rate to begin to be reduced in the third quarter of this year, but such data represents a challenge to this trend, as the Federal Reserve targets annual inflation of 2%, which the economy has not yet reached.
Jobs
Data released at the beginning of this month indicated that job growth in the United States accelerated last January due to strong economic performance and high worker productivity. This likely encouraged companies to hire more workers and not lay them off, a trend that may protect the economy from recession this year.
According to the Bureau of Labor Statistics, non-farm payrolls increased by 353,000 last month, and last December’s data was revised upward. Jobs increased to 333,000 instead of the 216,000 previously announced.
Job growth is still well above the rate needed to keep pace with the growth of the working-age population, estimated at about 100,000 jobs per month.
The unemployment rate reached 3.7% last January.
Source: Al Jazeera + agencies