The inflation rate reached a new high, increasing the tightening pressure of US monetary policy

   In January this year, the US consumer price index (CPI) rose 0.6% month on month and 7.5% year-on-year, the largest year-on-year increase since February 1982, highlighting the continued rise of us inflationary pressure and further strengthening the financial market's expectation that the US Federal Reserve will start raising interest rates in March.

   The labor department said that the rise in food prices, electricity prices and housing costs were the main factors driving the continued rise in overall prices in the United States in January. Excluding volatile food and energy prices, core CPI rose 0.6% month on month and 6% year-on-year in January, the largest year-on-year increase since August 1982. In the past 10 months, the month on month increase of core CPI has reached more than 0.5% in seven months, indicating that the inflationary pressure in the United States is unlikely to ease soon.

   The rising inflation rate in the United States has increased the pressure on the Federal Reserve to accelerate the tightening of monetary policy. At present, it is widely expected that the Federal Reserve will start the first increase in interest rates since the outbreak of COVID-19 on the regular monetary policy meeting held in March, but there is still uncertainty about the rate hike.

   Sarah house, a securities economist at Wells Fargo, said that the US Department of labor will release the February CPI data before the Fed's monetary policy meeting in March. If the data show that US inflation may have peaked at that time, the Fed may raise interest rates by 25 basis points at the March meeting; If the data show that US inflation continues to rise, the Fed may raise interest rates by 50 basis points.

   Economists pointed out that the US inflation pressure continues to be high. Affected by a series of factors such as strong consumer demand, continuous supply chain bottlenecks, rising wages and excessively loose monetary policy, the US inflation rate will still be significantly higher than the 2% target level of the Federal Reserve by the end of this year. To this end, some Fed officials advocate more aggressive interest rate hikes and faster contraction of the balance sheet to curb inflation.

   In an interview with the media on the 10th, James Brad, President of the Federal Reserve Bank of St. Louis, said that the inflation pressure in the United States continued to be worrying. He hoped that the Federal Reserve would significantly raise interest rates by 100 basis points before July 1.