Thus, inflation in interannual terms rises to 3.4%, two tenths more than expected and three tenths more than the previous month, which continues to break the slowdown in the rise in prices that has been occurring in recent months. News that will point out Federal Reserve American (Fed) facing its next interest rate meeting.
The CPI in monthly terms rises 0.3%, one tenth more than expected and two more compared to the 0.1% in November.
For his part, the Core IPC in year-on-year terms it rose by 3.9% (one tenth more than expected, although less than the previous 4.0%) and on a monthly basis it rose 0.3% (the same as the previous month).
“The data is especially relevant to determine to what extent the expectations of intervention rate cuts of the market are excessively optimistic (up to six cuts in 2024, with the first in March of 25 bp with a probability of 65%), which in our opinion they continue to be taking into account that the American economy still remains strong and inflation remains at levels of 3%-4%”, they point out in Renta 4.
“Although this represents a notable moderation From the double-digit levels it reached in 2023, it is still far from the 2% target, which we believe will not be easy to reach in the short term,” the manager adds.
Inflation: how it increased item by item
Food experienced a variation of 0.2% m/m, in line with the 0.2% in November, while the cenergy component had an acceleration to 0.4% from -2.3% in November, driven mainly by the increase in the price of gasoline of 0.2%. The service inflation remained stable at 0.5% m/m. Living place, which represents 44.5% of the index experienced a variation of 0.4% m/m, similar to that of the previous month, with rents increasing 0.4% m/m, slightly below the 0.5% registered in November. On the inflation side that excludes energy and foodthis came in line with expectations, standing at 0.3% m/m, although the interannual variation was 3.9%, slowing down from 4.0% in November, but slightly above the expected 3.8%. still being at a very high level.
According to Balanz, “the reaction of interest rates to the inflation surprise is being rather limited, with the 2- and 10-year Treasury bond rates erasing the previous gains they had been showing and operating at 4.37% and 4.04%, respectively. On the S&P 500 and Nasdaq futures side, these also they deleted the positive results that they had been showing once the inflation data was known and are located in slightly negative territory. Today’s data is likely to lead the market to reduce probability of Federal Reserve cut at its March meeting. Yesterday, the implied probability for a 25bps cut in March was above 60%.”
Source: Ambito
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