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January’s US inflation data emerged as a critical development this week. Powell made significant statements recently, while Trump argued that interest rates should fall alongside tariffs. However, Powell does not seem particularly concerned about these remarks.
US Inflation Data Insights
Trump, who desires lower interest rates, believes this could be achieved by increasing oil supply to lower energy prices. OPEC+ announced a decrease of 118,000 barrels per day in oil production compared to December. Trump contends that tariffs will reduce commodity prices, positively influencing inflation; however, in the short term, reciprocal tariffs are directly raising the prices of imported goods.
Inflation Projections and Market Reactions
Morgan reported that inflation, expected to decline particularly in the second half of this year due to base effects and weakness in certain items, could be neutralized or slightly increased by Trump’s tariffs. So, what did the January data reveal?
- US CPI Yearly Reported: 3% (Expectation: 2.9% Previous: 2.9%)
- US Core CPI Reported: 3.3% (Expectation: 3.1% Previous: 3.2%)
The data is dreadful and reflects the potential for further delays in interest rate cuts. Psychologically, the 3% level fosters the perception that the Fed’s target is moving further away, potentially dampening investors’ risk appetite. Consequently, investors are pricing in that the Fed will implement fewer interest rate cuts following the CPI report.
Bitcoin 
$109,703 has rapidly declined.
