Closing summary
Inflation ticked higher in the US in January as Donald Trump returned to office with a pledge to rapidly reduce prices.
The consumer price index rose by 3% last month – up slightly from December’s annualized 2.9% reading.
The closely watched index rose 0.5% on a month-to-month basis, stronger than the 0.3% forecast by economists.
The dollar rose on the news while stocks fell on both sides of the Atlantic, and government bond yields climbed, as investors digested the data – which dented hopes for interest rate cuts this year.
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James Knightley, chief international economist at ING, said about the surprise rise in US inflation:
US inflation came in well ahead of expectations, prompting the market to dramatically reprice the prospect of rate cuts. Potential tariffs add upside risk to inflation in coming quarters, but there are some encouraging signs that housing costs will slow meaningfully later in 2025 and keep the door open to the second half of the year cuts we are forecasting.
