January CPI Data Forecast: Inflation Persists Stubbornly, Is Fed's Rate Cut in H1 Hopeless?

The United States is scheduled to release the Consumer Price Index (CPI) for January on February 12th. After three consecutive months of upward trends, the market generally expects that the year-on-year growth rate of the overall CPI will remain unchanged, while the monthly rate of the core CPI may accelerate slightly. Institutions predict that the overall CPI in January may rise by 2.9% year-on-year, and the core CPI may increase by 3.2% year-on-year. Inflation in the service sector may accelerate due to various factors. Wells Fargo believes that inflation will remain flat this year, and it will be difficult for it to return to the 2% target.

The Federal Reserve did not adjust its policy at the January meeting and adopted a cautious attitude towards interest rate cuts. The easing cycle may be suspended for a long time. A survey by the University of Michigan shows that consumer confidence has declined and inflation expectations have risen. The market believes that this is related to the threat of tariffs. 

The Federal Reserve itself has also realized the risks that tariffs pose to inflation. Federal funds rate futures indicate that the first interest rate cut this year may not occur until July, and there is only limited room for policy adjustment. Tonight, the performance of Federal Reserve Chairman Jerome Powell at the House of Representatives hearing and his responses related to policies will once again draw significant attention.