Hotter-Than-Expected Inflation Lifts Terminal Rate Forecasts
The Federal Reserve’s preferred inflation measure exceeded expectations in January, bolstering the case for continued tightening in the months ahead. Data released by the Bureau of Economic Analysis this morning showed the core personal consumption expenditures index – targeted by the Fed – rose 0.6 percent in January from the prior month, up 4.7 percent year-over-year – topping consensus estimates. The overall personal consumption expenditures index was up 5.4 percent from a year ago, well above forecasts. Personal income rose 0.6 percent month-over-month, led by a 0.9-percent increase in private sector wages and salaries, along with a substantial jump in...