US Inflation Moderates in January, But Fed Remains Hawkish: A Look at the Latest Economic Data

In January, US consumer and producer prices rose at a slower pace than in the previous month, but they still exceeded expectations. The Consumer Price Index (CPI) increased by 6.4% year-on-year, which is slightly below the 6.5% seen in December. Producer prices rose 5.4% in January, which is higher than the expected increase and 0.7% higher than in December.

Despite the slowdown in price growth, basic services remained expensive, indicating that inflation pressures are still present in the economy. As a result, the Federal Reserve is expected to maintain a hawkish stance on monetary policy, with markets already pricing in rate hikes in March and May. Some analysts predict a 50-basis point rate hike in March, with the likelihood of further increases in June.

However, recent data on employment and retail sales have led some analysts to question whether a recession will occur in the US this year. The US economy has shown resilience, despite the fact that the Fed has raised rates by 4.5% over the past year.

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