President of Yardeni Research Ed Yardeni analyzes new economic data in the midst of the market weakness on earnings.
Federal reserves preferred inflation measure They showed that prices grew as expected in January a pace that remains above the target of the central bank level as its efforts to reduce inflation.
Trade department on Friday reported that Razum for personal consumption (PCE) The index increased by 0.3% compared to the previous month and 2.5% on an annual basis. These figures were in accordance with the estimates of economists surveyed by LSEG.
The Core PCE, which excludes unstable food and energy prices, has increased 0.3% by a month and 2.6% compared to the year, in accordance with estimates.
Federal reserves’ policies focus on the figure of PCE title as they try to slow down the pace of increasing prices at their goal of 2%, although they consider basic data a better demonstration of inflation. The PCE title in December decreased slightly with 2.6%, while Core PCE fell with 2.9% last month.
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The PCE title showed that Prices of goods It increased by 0.5% in January after being relatively straight in recent months. Prices for services increased by 0.2% last month, which was a slower pace of 0.4% in December.
Wages and salaries In January, they increased in January in January, the same as an increase in December.
AND the rate of personal savings As a percentage of available income was 4.6% in January, the highest rate recorded from 4.8% in June and noted jump with 3.5% of the rate recorded a month ago.
The main economist Ey Gregory Daco noted that the 1.1 percent increase in the personal savings rate “was observed because it could indicate the beginning of the savings of caution by households. It is too early to conclude if this is the case, but it will be something to supervise as a threat to tariffs, and tax on uncertainty and tax.”
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Inflation remained stubbornly high in January, although prices grew in a slower pace than in December. (Photo Frederic J. Brown / AFP via Getty Images / Getty Images)
The report of the trade department comes because the federal reserves should meet in mid -March at the next meeting of politics, which falls after several presidents Donald Trump The proposed tariffs should take effect. Increasing consumer prices increases as a result of tariffs, as the costs of import tax costs were transferred, Central Bank policy creators noted.
“The Fed will be glad that the inflation cools down in January, but is worried about the prospect of prices,” said Comeric Bill Adams economist. “Higher tariffs It will increase the prices of imported goods, as well as the produced goods, whose manufacturers can charge higher prices with fewer foreign competitions. “
“Also, the incentive to increase the deportation could tighten the labor market and revive inflationary pressure from faster growth in professions with chronic deficiency of workers such as agricultural workers, construction workers, home health assistants and crews at restaurants,” Adams explained.
Fed Jerome Powell’s president said after the last central bank meeting that policy creators are careful about the potential risks for the labor market and inflation. (Photo Liu Jie / Xinhua via Getty Images / Getty Images)
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AND Federal reserves He lowered the target range for the federal funding rate for 50 points in September, followed by a couple of 25 decreasing base points in November and December. The central bank has left unchanged in the range of 4.25% to 4.5% in January due to the uncertainty of inflation and labor market.
Policy creators are expected to hold rates at the next meeting of politics in mid -March, and market prices in 94.5% likelihood that rates remain unchanged, according to the CME Fedwatch tool. This was up 68.5% a month ago.
