Bank of America analysts say the latest Consumer Price Index (CPI) report delivered another upside surprise, reinforcing the case for the Federal Reserve to keep rates on hold.
The headline CPI rose 0.5% in January (0.467% unrounded), pushing the annual rate to 3.0%, while core CPI—which strips out food and energy—increased 0.4% (0.446% unrounded), bringing the year-over-year figure to 3.3%.
“The bottom line is clear: the Fed has no reason to cut further,” the analysts wrote, noting that inflation remains stuck above the central bank’s 2% target and the unemployment rate nearly dipped into the 3% range in January.
While they still see the threshold for additional rate hikes as high, Bank of America argues that tightening should now be back in the conversation following the stronger-than-expected inflation data.
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