Eggs are displayed in a grocery store, whereby the purchases for bird flu on February 10, 2025 continue to affect the egg industry in New York City.
Spencer Platt | Getty pictures
The report on the consumer price index in January will probably tell a familiar story: another month, another expected failure for inflation in connection with the aim of the Federal Reserve, with concerns what happens from here.
Instead of looking for the headlines that do not change significantly from December, the markets will go through the details for trends that could give hope that the FED can reduce interest again at some point.
“Inflation is over the goal, whereby the risks are turned upside down, the activity strong and the labor market seems to have stabilized on full employment,” said the economist of the Bank of America, Stephen Juneau, in a note. “If our CPI forecast is correct for January, the case for the Fed in which it stays in the queue will continue to be reinforced.”
The Bank of America is one of the most pessimistic voices on Wall Street to expect further loosening of feeding.
In fact, the economists of the bank believe that the Fed for the rest of the year – and beyond -, if the inflation remains higher, the labor market continues to be strong and the economy generally remained out of the difficulties that would require reduction in installments. Otherwise, the dealers are found that the FED approved a quarter percentage point in July and then classified according to the CME groups.
Immediately the forecast of the Bank of America with the Dow Jones Outlook for the CPI in January is mixed up pretty well: a monthly increase of 0.3% for the all-item index and a 12-month inflation rate of 2.9%, the latter As in December. Without food and energy, the respective core readings are projected at 0.3% and 3.1%, whereby the annual brand only decreases one level compared to the reading of 3.2% in December.
According to Goldman Sachs, the increases from the perspective of increases in the rise of automotive prices and car insurance as well as communications to the increase in automotive prices and car insurance are likely to be due. The company expects a moderate pressure down from the flight pots and, above all, the rental categories that make up about a third of the CPI weighting and were largely responsible for inflation above the 2% goal of the FED.
From here it only gets more complicated.
Optimism despite customs concerns
While economists expect a good proportion of disinflation from some important categories, the tariffs of President Donald Trump could act as an inflationary counterweight.
“In the future, we will see further deposits in the pipeline next year when we are expanded in the car, housing and labor markets, but an offset of an escalation of tariff policy,” said Goldman economist in a note.
However, there has been some good news lately. While Michigan's consumer survey showed a surprising disorder of the inflation expectations, other measures indicate that the prospects are actually softer.
The National Federation of Independent Business Survey showed that only 18% of the small business measuring devices were inflation as its biggest problem, the lowest level since November 2021. The collection of Cleveland Fed's inflation expectations also showed that this The first quarter of the company in Cleveland Fed resulted in CEOs and other top executives will see CPI with 3.2%in the next 12 months. This is significantly higher than the 2% standard, but it is a sharp decrease of 3.8% in the fourth quarter.
In the middle of the contradicting information, the FED is expected to be stopped.
The chairman of Fed, Jerome Powell, said on Tuesday that the central bank was in no hurry to further reduce interest, while Cleveland President Beth Hammack determined the persistence of inflation, which could be tightened by tariffs as a reason for the stay.
“While monetary policy in nature looks forward to the future, forecasts are not a substitute for realizations. Or as they could have exposed to Jerry Maguire, I show the low inflation,” said Hammack.
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