Odds for Fed’s Rate Cut Push Back to July as US CPI Shocks Wall Street

The forecast for the first Fed’s rate cut in 2024 is now pushing back from June to July after January CPI inflation rises at a higher-than-expected rate. 


The Consumer Price Index (CPI) for the US rose 3.1% YoY in January 2024, which was higher than the estimate of 2.9%. Prices also rose 0.3% MoM, higher than 0.2% expected. 

Meanwhile, Core CPI, which excluded volatile food and energy prices, rose 3.9% YoY, compared to 3.7% expected. On a monthly basis, core CPI rose 0.4%, compared to 0.3% expected.


The market is now pricing in just four rate cuts in 2024 after the report of January CPI, down from 6-7 cuts expected earlier this year. Meanwhile, the Federal Reserve maintained its view for just three cuts this year. 

Odds for a cut in March are now below 10%, while chances in May and June are also plummeting.