US: Widely-expected pickup in inflation remains some months away – Wells Fargo

Data released on Wednesday showed the Consumer Price Index (CPI) increased 0.4% in December and 1.4% from a year earlier. Analysts at Wells Fargo point out core inflation slowed in December and underscores that on its own, the pandemic is a disinflationary event. 

Key Quotes: 

“On a year-ago basis, CPI inflation moved up in December but remains weak at 1.4%. The 12-month change in the CPI is set to pop in the spring, however, reaching roughly 3% in May after prices collapsed last year during initial lockdowns for categories like gasoline, hotels, and apparel. But the easy base comparisons will overstate the degree of price pressures we expect this year. We anticipate inflation to firm over 2021 as consumer spending roars back in the second half of the year, but do not expect inflation will be off to the races.”

“The Fed likely will not be spooked by the year-over-year pop in inflation this spring. Inflation is a process, driven by ongoing prices changes rather than one-off adjustments in reaction to specific events. Instead, the FOMC will be focused on signs that the strengthening in inflation will be durable. Inflation expectations will play a crucial role in that assessment. Market measures of inflation expectations have been rising, but consumer measures remain near historic lows. That could change in the second half of the year when realized inflation is higher, but we suspect it will be some time before inflation returns to a pace consistent with the Fed’s target and the FOMC is confident it can stay there.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

AUD/USD keeping its head above 21DMA at 0.7673 for now

AUD/USD saw downside during Monday’s Asia Pacific and early European session, dropping momentarily as low as 0.7660. The pair broke below an uptrend linking the 28 December 2020 high with the 4, 11 and 15 January lows.


EUR/USD:Falling wedge on 4H tests bearish impulse below 1.2100

EUR/USD portrays choppy trading moves between 1.2075 and 1.2080 during Tuesday’s Asian session. Bullish chart pattern, recovering MACD keep buyers hopeful. Early February lows, 61.8% Fibonacci retracement add to the downside filters.


XAU/USD fades recovery moves below $1,850, awaits fresh clues

Gold eases from the top of an immediate $10 trading range while declining to $1,837 at the start of Tuesday’s Asian session. The yellow metal took a U-turn from the lowest since December 01 the previous day as the US dollar stepped back after refreshing the one-month high.

Gold news

Stellar awaits a massive breakout but remains inside a no-trade zone

XLM has continued to trade sideways since we last reported about it. The digital asset remains locked inside a tightening range which will eventually burst. 

Read more

US Dollar Index: Immediately to the upside comes 91.00

DXY extends the march north and already trades at shouting distance from the 91.00 barrier, or new 2021 highs.

US Dollar Index News