The latest U.S. Consumer Price Index (CPI) report has drawn varied responses from Wall Street, influencing Federal Reserve policy expectations and market sentiment.
ING revised its forecast, predicting three rate cuts in 2025 but delaying the first to June instead of March. The firm highlighted monthly inflation trends, emphasizing the need for 0.17% month-over-month increases to reach the Fed’s 2% annual core inflation target. Current inflation remains "too hot for comfort," according to ING.
Morgan Stanley views the softer-than-expected CPI as further proof of disinflation, especially in core services excluding housing. The bank expects a March rate cut and attributes recent inflation acceleration to temporary factors. While January may see seasonal inflation spikes, Morgan Stanley anticipates a notable year-over-year decline.
Wolfe Research described the CPI data as slightly softer, forecasting a modest 0.19% rise in December core PCE inflation with a 2.8% year-over-year rate. The firm expects two rate cuts in 2025, likely in May and September, countering excessive fears of further Fed hikes.
Wells Fargo noted that December headline inflation remained elevated due to food and energy costs, while core CPI showed improvement. However, with inflation trends still above target, Wells Fargo reduced its 2025 rate cut expectations to two, in September and December, down from three previously.
The mixed interpretations highlight ongoing uncertainty around inflation trends and the Federal Reserve’s policy trajectory, keeping markets focused on future data.


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