February 20, 2024 — The Inflation Rate Remains Stubborn


Inflation was unexpectedly high in January. Consumer prices were up 3.1 percent last month, proving the Fed’s reticence to lower interest rates is justified. The Fed fears a rebound in inflation and has chosen to wait rather than act too quickly. Their targeted inflation rate is 2 percent, and it is unlikely the path to that level will be linear.

Analysts were expecting a CPI of 2.9 percent, though January’s 3.1 percent is down from 3.4 percent in December, and was the lowest since June.  The yield on 10-year treasury notes rose on the news to 4.315 percent, the highest since the end of November. Core prices were up 3.9 percent in January for the second month in a row.

Given the January data, pressure is off the Fed to act in the near term, delaying hopes for any action until June at the earliest.  The Fed will meet next on March 19-20.