Inflation accelerated in the United States in January, while consumer spending increased

The personal consumption expenditure (PCE) index tracked by the US Federal Reserve rose 0.6% last month after rising 0.2% in December. The core PCE price index (excluding volatile components) rose 4.7% year-on-year in January.”I honestly don’t understand why people are surprised by the PCE data,” said Brian Jacobsen, senior investment strategist at All Spring Global Investments, Wisconsin. – We already knew that retail sales in January would be higher than expected. We also knew from the CPI data that inflation was higher than expected. There were a few more informative details: like a significant increase in salaries. We will likely see a pullback in the January numbers when the February data comes out. It’s more of a leap than a change in trend.”Ken Mahoney, managing director of Mahoney Asset Management, points out: “We have had six months of falling CPI, which has been positive. At the same time, Mahoney agrees that “there has been a big increase in spending, and the Fed doesn’t like it. They are trying to slow the economy down a bit to bring inflation down, and the market sees this as a sign that rates could potentially stay higher for longer… The dollar is strong now, but in terms of international earnings (a lot would prefer ) to have a weaker dollar. Thus, with humor, Ken Mahoney summarizes the situation in the traditional jargon of the exchange.Gene Goldman, chief investment officer at Cetera Investment Management, California, notes that “PCE’s fundamentals were still well above expectations…The big surprise was that while personal spending was higher than expected, the rate of Savings have increased This continues to confirm the fact that the economy is strong.Bill Adams, chief economist at Comerica Bank, Texas, agrees: “The bottom line is that the economy continues to grow strongly. Yes, headline inflation has risen more than expected, which is another sign that it will not be sustainable at the start of 2023, making it more likely that the Fed will keep interest rates higher for longer. The higher inflation is at the start of the year, the more the Fed will put the brakes on this year… which is a headwind for risky assets.Priya Misra, Head of Global Strategy at TD Securities, New York, adds: “Smoothing the yield curve makes sense…the Fed clearly has work to do to…get inflation down to 2%. This is not good news for risky assets.Peter Cardillo, chief economist at Spartan Capital Securities, New York, concludes: “The numbers are hotter than expected. And we’ll see pressure on yields…we’ll probably see three more rate hikes, and the tightening cycle will most likely not end until the second half of the year. The economy remains strong. What surprises is the consumer: he spends.Cleveland Federal Reserve Chair Loretta Mester said on Feb. 24 that she was not surprised by the latest U.S. inflation data, which she sees as another reminder that rates need to yet to be raised: a sustained trajectory of up to 2%,” Mester told Reuters on the sidelines of a conference in New York organized by the University of Chicago Business School.”We just need to see all those prices come down again, and we haven’t seen that in a sustainable way yet,” Mester says. The Fed veteran noted that she had advocated a 50 basis point rate hike at the last Fed meeting, versus the 25 basis points supported by her colleagues: “There is inflationary pressure in the economy, the inflation rate is still too high, and this calls for more attention to monetary credit policy.Mester reiterated that she still believes the federal discount rate, which now ranges from 4.5% to 4.75%, would need to top 5% and stay at that level to bring inflation down.