US Inflation Above Expectations, Fed’s Base Rate Cut Doubtful

Small monthly increase, but above economists' forecasts. Putin: Russia would prefer Biden to Trump as U.S. president

The rise in U.S. consumer prices continues unabated: in January 2024, the inflation rate recorded a moderate decline, but significantly exceeded the 2% target set by the Federal Reserve as a prerequisite for reconsidering a cut in base rates, which are now at “prohibitive” levels of 5.25-5.5%. The U.S. inflation rate was 3.1% year-on-year in January, falling short of the U.S. government’s expectation of a decline to at least below 3 percent.

According to American newspapers, “this situation comes at a time when rising purchasing power has become the focus of the political battle for the next U.S. presidency, putting pressure on Joe Biden’s leadership.” The 82-year-old American president, who has been criticized for “bad memory,” suddenly has the support of the Kremlin. In an interview with Russian television channel Rossiya 1, President Vladimir Putin said that “Biden is more politically savvy” and for that reason Russia would prefer him to Donald Trump as the next U.S. president. In Putin’s view, the current White House host is not only more experienced, but “he is also more predictable because he is an old-school politician,” Putin said, adding that “Trump is being defined as a non-systemic politician, he has his own opinion on how the United States should develop relations with its allies.” Putin, however, emphasized that Russia is “ready to work with any U.S. president” and that it would be “inappropriate” to interfere in the U.S. election campaign at the moment.

Returning to U.S. inflation, the data point to its slowdown from 3.4% in December 2023, suggesting less marked price increases than seen in recent months.

But analyzing the details shows that U.S. prices rose 0.3% in just 30 days – from December to January – exceeding the 0.2% growth forecast for the previous period. The increase caught analysts by surprise, as they had expected more limited growth of 0.2% with an even more optimistic annualized forecast of 2.9%.