U.S. CPI Surges, Reinforcing Fed's Cautious Stance

The U.S. Consumer Price Index (CPI) surged by a higher-than-expected 0.5% in January, solidifying the Federal Reserve's cautious approach to interest rate cuts. The increase followed a 0.4% gain in December, reported by the Labor Department on Wednesday.

Over the past 12 months through January, CPI advanced 3.0%, up from 2.9% in December. Economists polled by Reuters had forecast a 0.3% CPI gain and a 2.9% annual increase.

Market Reaction:

* Stock index futures dropped by 0.9%, indicating a weak market open on Wall Street.
* The 10-year U.S. Treasury yield rose to 4.631%, while the two-year yield jumped to 4.37%.
* The dollar index gained 0.43%, while the euro fell 0.3%.

Expert Commentary:

Peter Cardillo, Chief Market Economist at Spartan Capital Securities, noted that the data confirms ongoing inflation concerns and supports the Fed's cautious stance on rate cuts. He expressed worry that the prospect of tariffs further exacerbates inflation.

Whitney Watson, Co-Head and Co-Chief Investment Officer at Goldman Sachs, stated that the stronger-than-expected CPI reinforces the Fed's cautious approach to easing. Watson anticipates the Fed will remain in a "wait and see" mode for the time being.