Economists Forecast Rise in CPI and Core CPI Inflation Rates
By Economists are expecting the consumer price index (CPI) to rise 0.5% in January, with the annual rate slipping to 6.2% from 6.5%. Core CPI, which excludes food and energy, is anticipated to rise 0.3%, which would lower the core CPI inflation rate to 5.5%. The core consumer price index is forecast to rise 0.4% in January, slightly above December’s 0.3% increase. It is predicted that core CPI will increase by 5.5% in January, the smallest it has been in the past 13 months and a decrease from the 5.7% seen in the preceding month.
The yield on the 10-year Treasury bond increased by 5 basis points to reach 3.81%, a record high for Short-term interest rates, which have a closer connection to the Federal Reserve, did not fluctuate significantly.[0] Investors predict that the Federal Reserve will likely raise interest rates by a quarter of a point at their March and May meetings.[0] The markets are increasingly leaning toward a third hike taking place either in June or July, although the chances of this happening decreased slightly on Wednesday.[0]
On Tuesday, Treasury yields increased, with the two-year note rate increasing as much as 12 basis points, which brought it to a nearly 4.64% high– the highest rate since November and less than 20 basis points away from the multiyear high from last year. Yields for three- and five-year terms both reached their highest points in[1] As the day went on, rates stayed at high levels, and they may go up even more during the Asian trading session.[1]
Since the beginning of February, Treasury yields have increased significantly, acting as a slight impediment to the stock market rebound, though not as powerful as it was in 2020. Yields are increasing now due to diminishing worries about a recession, whereas in 2022 they increased mainly because of inflation and concerns about the Federal Reserve.[0] Wall Street is hoping for the Fed rate hikes to be finished, however, it doesn't want to see the economy falter.[0]
The Federal Reserve has increased rates eight times in succession over the course of less than a year, with the latest rise being quarter of a percentage point, which is a slower rate of increase than almost all of 2022.[2] Fed officials are expecting to implement a few more interest rate increases of a similar magnitude, and then they will pause to allow the higher rates to take effect.[3] The federal funds rate, which is the Federal Reserve's base policy rate, is presently set between 4.5 and 4.75 percent – a level that is high enough to bring the economy to a slower pace.[3]
0. “Dow Jones Futures: Market Rally Keeps Rising” Investor's Business Daily, 16 Feb. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-market-rally-keeps-climbing-shopify-roku-cisco-are-key-earnings-movers
1. “Traders Capitulate, Abandoning Fed Rate Cut Bets After CPI Spike” Yahoo News, 14 Feb. 2023, https://news.yahoo.com/traders-capitulate-abandoning-fed-rate-213611625.html
2. “Treasury yields fall as investors await key wholesale inflation data” CNBC, 16 Feb. 2023, https://www.cnbc.com/2023/02/16/us-treasury-yields-investors-await-key-wholesale-inflation-data.html
3. “CPI: Prices rise 6.4 percent in January, seventh month of easing inflation” The Washington Post, 14 Feb. 2023, https://www.washingtonpost.com/business/2023/02/14/inflation-easing-cpi-january/
