Wholesale prices likely accelerated again in January as strong consumer demand and pandemic-related supply-chain snarls continued to fuel the highest inflation in decades.
The eye-popping reading – which marked the eighth consecutive month the gauge has been above 5% – will likely amp up pressure on theto chart a more aggressive course in normalizing monetary policy. The central bank is widely expected to raise interest rates in March, but the hotter-than-expected inflation report could mean that policymakers pencil in a super-sized half-point hike.
Hiking interest rates tends to create higher rates on consumers and business loans, which slows the economy by forcing them to cut back on spending. / Getty Images) "At this point it’s not a question of will they, won’t they – it’s a question of how many hikes we’ll see in 2022, and what the magnitude and pace will be," Mike Loewengart, managing director of investment strategy at E*Trade, said after the CPi report. "Given views on these aspects are all over the map at this point, there is a lot for the market to be uncertain about.
"We’re going to be led by the incoming data and the evolving outlook," he told reporters during the central bank's policy-setting meeting last month.
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