The Fed’s prolonged efforts to curb stubbornly high inflation did show some results in the near past, which raised anticipations of the Fed downsizing its rate hikes and putting a pause soon. A fresh bout of investor optimism followed.
However, January's Consumer Price Index (CPI) slowed only slightly to a 6.4% annualized gain, higher than the market forecast of 6.2%. In addition, the U.S. employment report showed that the labor market is running hotter than expected. Moreover, with significant retail sales growth of 3%, the Fed could keep the rates higher for longer than the market’s anticipation.
