Trump’s first inflation report since beginning his second term shows prices have risen more than expected.
Core inflation in January rose 3 percent from a year earlier, more than analysts predictions.
Stocks took a hit with the S&P 500 down around one percent as markets opened on Wednesday morning.
While some economists have warned that Trump’s tariffs would fuel inflation, others pointed out that many businesses put through price rises at the start of the year.
It comes as Federal Reserve Chair Jerome Powell told Senators yesterday that the Fed would not rush cutting interest rates as it continues its battle to tame inflation.
Today’s Consumer Price Index figures may even trigger speculation that the Fed will need to begin raising rates again, Bloomberg reported.
Traders are now betting that the next rate cut will be as far off as December.
Trump remained defiant on Wednesday morning arguing on his Truth social account that ‘interest rates should be lower.’
Stocks took a hit in pre-market trading with the S&P 500 down more than one percent following the announcement
‘Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!! Lets Rock and Roll, America!!!’ he wrote.
Following the figures Trump attributed the rise to his predecessor posting ‘BIDEN INFLATION UP!’
However, Wall Street experts argued that the Fed will likely be pleased they have not succumbed to pressure to cut.
‘The Federal Reserve will likely feel vindicated in its decision to pause rate cuts in January, as the spectre of inflation looks like it’s raising its ugly head once again,’ Isaac Stell, Investment Manager at Wealth Club said.
‘The Fed not only has to juggle its dual mandate of price stability and maximum employment, but must also deal with the White House tariff and policy circus, which is adding additional uncertainty to the economic outlook,’ Stell explained.
‘If things carry on the way they’re going, whispers of a rate hike may start to echo through the corridors of the Fed,’ he warned.
Chief global strategist at JPMorgan Asset Management David Kelly agreed: ‘There is nothing in this report that suggests the Fed should lower interest rates.’
US Investment Analyst Bret Kenwell from eToro said that while the figures will weigh on stocks in the short term there are other factors at play that may take some time to smooth out.
Core inflation in January rose 3 percent from a year earlier, more than analysts predictions
‘We do tend to see higher inflation numbers at the start of the year, while investors have to wonder if companies were front-loading their orders to get ahead of potential tariffs, that had the potential to go into effect later this quarter,’ Kenwell explained.
‘Ultimately, it will take a few more reports to see how any of these potential trends take shape, which could pave way for near-term uncertainty.’
This article was originally published by a www.dailymail.co.uk . Read the Original article here. .