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Finance Associated Press, February 10 (edited by Niu Zhanlin) On Friday, local time, the U.S. Bureau of Labor Statistics released the annual revised report on the consumer price index, which showed that the core CPI annual rate in the fourth quarter of 2023 was 33%, which is the same as the previous figure. However, the US CPI monthly rate in December was revised to 02% compared to 03%γ
This better-than-expected correction will come as a sigh of relief to the Fed, which is looking for more evidence that the pressure is continuing to subside before it starts cutting rates. Inflation slowed rapidly in the second half of last year, but policymakers are skeptical that this rapid slowdown can be sustained.
Fed Governor Waller previously stressed that the Fed is expected to cut interest rates this year as inflation continues to fall, but this process should be done cautiously and not in a hurry. Waller also said he would be watching the CPI revision, which financial markets and analysts have been waiting for since then.
But Brian Jacobsen, chief economist at Annex Wealth Management, commented: "The CPI revision data is pure fuss, the Fed mentions a certain data, and then everyone waits with bated breath, only to find out that it's just a bunch of noise, which is becoming a trend." β
For example, Jacobsen said that Chairman Powell had mentioned that the preliminary value of the University of Michigan Consumer Sentiment Index was important, but it is no longer important. Super-core inflation, which was once thought to be important, is not important anymore. The annualized inflation rate for the past three months has been important, but it is clearly not important now. The same thing happened with the revision of the CPI. Perhaps the Fed's reference to the data release is more of an inversely important indicator than anything they actually see.
While the December CPI data was revised downward, the November CPI data was revised upwards and was initially expected to be 01%, corrected to 02%γThe October CPI data was unchanged.
The data correction comes from a recalculation of the seasonally adjusted factor, which is the model used by the United States** to exclude seasonal fluctuations from the data. Normally the annual revision of the CPI index does not attract much attention, but the data was revised sharply upwards at the beginning of last year, along with Waller's comments.
Steven Ricchiuto, chief U.S. economist at Mizuho, said the CPI revisions would not prompt the Fed to cut interest rates. The point now is that the Fed is not in a hurry. The market is in a hurry, but the Fed is sitting there and saying, we're not in a hurry. In fact, from their point of view, things are really good.
Paul Ashworth, chief North America analyst at Capital Economics, said some Feds** feared a repeat of last year's situation, although there were no meaningful changes this year, at least partly in favor of a rate cut earlier in May.
The fourth-quarter CPI inflation data will have an impact on the Personal Consumption Expenditures (PCE)** index, which the Fed uses to determine whether it is on track to achieve its 2% inflation target.
The Fed's next move is widely expected to be a rate cut, with many now expecting the first rate cut to be in May. Inflation data in the coming months is likely to have a bigger impact on when the central bank cuts rates for the first time. New York Fed Williams previously said: "Only when we are confident that inflation is continuing to move towards 2% will we be able to ** the degree of policy constraint." β
Following the report's release, traders still widely expect the Fed to leave rates unchanged at its next meeting in March, followed by a cut in May, followed by four more 25 basis point rate cuts by the end of the year, according to CME Group's Interest Rate Watch tool.