Charles Schwab & Co. The investment chief strategist, Liz Ann Sonders, analyzes the January report on the ICC on “earning money”.
A warmer inflation report than expected of January and the uncertainty about the president’s impact Donald Trump Consumer prices tariff plans could take into account the decision to cut the rates of the federal reserve, said expert economists.
The Department of Labor published the Consumer Price Index (IPC) for January on Wednesday, which showed that inflation was 3% on an annual basis, compared to 2.9% a month ago, after a Monthly increase of 0.5% larger.
THE Increased inflation comes after the Fed opted against a fourth drop in consecutive interest rate at its meeting last month. The uncertainty surrounding Trump’s plans for prices, which are taxes on imported products, and their implementation deadlines could cause a longer expectation of more drops than expected.
“Today’s data reaffirm Powell’s decision to put rate drops on the rear burner for a long time,” said Charlie Ripley, the main investment strategist for Allianz Investment Management. “Overall, today’s inflation data should force market participants to rethink the Fed capacity to reduce rates this year, in particular given the price increase is probably Not linked to any price activity of the White House. “
Inflation increases by 3% in January, warmer than expected
Bill Adams, chief economist of Comerica Bank, said that hot inflation pressure serves as a “confirmation that pricing pressures continue to boil below the surface of the economy” and “will strengthen the inclination of the Fed to Less drops in slow terminal rate and perhaps even in 2025. “
“The Fed also looks at the impact of higher pricesMore restrictive immigration policies and tax reduction plans, “added Adams.” These policies could all add to inflation while their effects have repercussions in the economy, which has made the Fed maintain the higher interest rates than they would have been under the status quo. “”
Trump calls for lower interest rates to go hand in hand with prices: “allows rock and roll, America”
The president of the federal reserve, Jerome Powell, said that the Fed was waiting to see how pricing policies are implemented before taking into account any inflationary impact. (Mandel Ngan / AFP via Getty Images / Getty Images)
Seema Shah, global world strategist for the management of the main assets, said that the inflation report “would make a reading very uncomfortable for the Fed” given the growth in prices and noted that “the agenda Government policy threatens to increase the expectations of inflation ” – a dynamic that could lead to inflation, the risks become” too strongly weighted upwards to allow the Fed to reduce rates this year ” .
The EY chief economist, Gregory Daco, said that the point of view of his business is that the FED “will maintain an expected approach in the coming months” and that he currently sees two rate drops of the Fed in June and December. “The risk is tilted towards less relaxation if the mixture of administration policy feeds inflation and inflation,” said Daco.
Trump explosions nourished for not having reduced interest rates
President Donald Trump has imposed new prices on China and threatened prices in Canada and Mexico, as well as reciprocal prices on other business partners. (Jabin Botsford / The Washington Post via Getty Images / Getty Images)
Ryan Sweet, American chief economist at Oxford Economics, noted that the China prices And other threatened prices have “still made their way in inflation data”.
“The Fed’s response to the prices is not simple, but we do not think that tighter monetary policy is likely because it would enhance the trail of the tariff economy,” said Sweet. “The Fed needs time to assess the way the prices affect the two sides of its double mandate, keeping it paralyzed until December, when we think that his attention will drop from inflation to his job warrant, leading to an aggressive relaxation in 2026. “
“The implications of monetary policy are clear, but it is not clear if the CPI of January will give some in the break of the Trump administration on going quickly with some of the prices offered. The prices can still Be used as a negotiation tool to obtain concessions from other countries, but the political optics to put a little upward pressure on consumer prices via prices would not be excellent for the Trump administration “, he explained.
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President of the Federal Reserve Jerome Powell testified before the Committee of Financial Services of the Chamber on Wednesday and was questioned about the impact of prices on the cost of living of the Americans and the efforts of the Central Bank to tame inflation, and the President noted that the Fed does not comment on the political decisions that she does not have discretion.
“”The Fed Has no role in the creation of prices and, you know, we do not start the decisions made by those who have this authority, “said Powell.” We try to stick to our own knitting. In this particular case, it is possible that the economy evolves in a way because of prices, or partly because of the prices, that we had to do something with our policy rate. But we cannot know what it is before we know what policies are adopted. “”
