US annual inflation fell to 2.4% in January, versus market expectations of 2.5%.
US MoM inflation fell to 0.2% in January, from 0.3% in December, below market expectations of 0.3%.
Annual core inflation (excl. energy and food) fell to 2.5% in December in line with expectations.
MoM core inflation rose 0.3% in January in line with expectations.
Isaac Stell, Investment Manager at Wealth Club, said, “US inflation has surprised to the downside, showing disinflationary progress is the US is on track and that rate cuts could well be on the cards as we move through 2026.
Economic conditions in the US are currently showing signs of improvement in the form of solid GDP growth and a stabilising labour market.
“These latest positive inflation figures mean that if the disinflation trend continues, policy makers are likely to ease rates as 2026 progresses. Bond markets are currently pricing in two cuts for 2026, starting in May, which would bring interest rates down to a range of 3.00-3.25%, a level at which many analysts deem to be a sensible neutral rate.
With tariff related goods inflation expected to peak in the first half of the year and rental inflation set to continue to normalise, the signs look positive for inflation to continue its downward trend. In the near term however, policy makers may deem it appropriate to keep rates steady for a couple more meetings whilst they continue to survey incoming data and make sure the disinflation seen today, is the start of a trend and not just a blip.”
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