Inflation Jumps in January, Reducing Odds of Near-Term Fed Rate Cuts

• Inflation rose more than expected in January, reducing chances of a Fed rate cut in March or May • Core CPI increased 0.4% monthly and 3.9% annually, highlighting stubborn underlying inflation • Fed Chair Powell said a March rate cut is likely off the table due to lack of confidence inflation is contained • Although inflation has fallen from peak, progress to 2% target has slowed in recent months • Cooling labor market and economic activity needed for further disinflation progress and potential May cut