Fed Survey: Individuals Count on Greatest Pay Hikes in Years

Fed Survey: Individuals Count on Greatest Pay Hikes in Years

The Federal Reserve Bank in America are watching out for an increase in inflation in order to gauge when the next interest rate hike might be made.

The all items index rose 2.1% for the 12 months ending January, the same increase as for the 12 months ending December.

The CPI increased 0.5 percent in January on a seasonally adjusted basis, the Department of Labor reported Wednesday.

The Federal Open Market Committee announced in late January that they anticipates further rate increases in 2018, causing investors to believe the government will raise interest rates more than two times in 2018.

The yield on 10-year U.S. Treasury notes has risen nearly half a percentage point since the beginning of the year.

Benchmark U.S. 10-year Treasury yields were near their session highs at 2.8894 percent, but a key measure of near-term volatility fell, in contrast to its reaction to strong U.

USA weekly jobless claims, producer price index, Empire State manufacturing survey, industrial production and housing market index are due on Thursday, while housing starts, import and export prices and consumer sentiment are due on Friday.

Annual inflation in the United Kingdom was at 3.1 percent in November and 3 percent in December previous year.

"The unchanged CPI print for January continues to validate our view that the downtrend in inflation is likely to be very gradual", Nikesh Sawjani, an economist at Lloyds Bank's commercial arm said. The stability of underlying inflation for most of this century suggests that only a huge economic shock, or major structural change, would dislodge it far from the typical 2% target.

If long-dormant inflation spikes, that means interest rates, which are already on the rise, will go up at an accelerated rate.

The Fed is expected to raise rates at least twice this year but aims to keep inflation around 2 percent according to the CPI's.

United Kingdom manufacturers increased the prices they charged by 2.8%, less than the consensus forecast of 3% and the smallest increase since November 2016.

"The capital goods, a barometer of investments, showed a sharp increase in output by 16.4 per cent in December, 2017 as against a decline of 6.2 per cent year ago".

The main upward effect came from prices for a range of recreational and cultural goods and services, in particular, admissions to attractions such as zoos and gardens. And the so-called "core" CPI, which strips out volatile food and energy costs, is seen rising at a 1.7% annual clip.

Related:

Comments


Other news