Investing.com – A fairly strong released on Wednesday pushed up market expectations that the Federal Reserve could accelerate plans to remove accommodative monetary policy this year.
The consumer price index (CPI) for January increased by 0.5% from the prior month, beating expectations for a gain of just 0.3%.
Annual headline inflation held steady at growth of 2.1%, surprising the consensus that had expected a drop to 1.9%.
Core CPI, which excludes volatile food and energy costs, rose by 0.3%, edging past expectations for 0.2% increase. That was also its largest increase since January 2017.
Annual core inflation also unexpectedly held steady at 1.8% when analysts had forecast a slight decrease to 1.7%.
Markets reacted quickly with an immediate push up in the odds for a more aggressive tightening of monetary policy.
Although the odds for the next rate hike by the Fed in March held steady at 81.7%, according to Investing.com’s , markets increased the probability for three hikes this year to 58.7%, from 54.3% prior to the release. Notable, odds for a fourth hike in December advanced to 23.2%, compared to 19.5% ahead of the publication.
Furthermore, U.S. futures tanked directly after the data and .
The also reacted to the increased expecatations for policy tightening, at 90.02, while the on the 10-year U.S. Treasury also spiked to session highs of 2.882% on the back of higher inflation expectations.
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Source: Investing.com
