US CPI higher than expected. Could the Fed hike 50bps?

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The January US CPI print was 7.5% YoY vs and expectation of 7.3% YoY and 7.0% YoY in December. This was the highest level since February 1982. In addition, the Core Inflation Rate, which excludes volatile food and energy prices, was up 6% YoY in January vs 5.9% YoY expected and 5.5% YoY in December. According to the CME Fedwatch tool, markets are now pricing in nearly a 50% chance of a 50bps hike in March. Before the CPI data, chances were in the in the 33% range. In addition, markets are now pricing in a chance of a full percentage point increase (100bps) by the June 15th meeting.

US CPI higher than expected. Could the Fed hike 50bps?

Source: CME

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