The latest economic report has thrown a curveball, showing inflation rising faster than expected in the first month of Trump’s second term.

According to fresh data, core inflation climbed 3% in January compared to the previous year, outpacing analysts’ predictions and raising concerns about price stability.

Stock Market Reacts with a Dip

Investors didn’t take the news lightly.

Pre-market trading saw the S&P 500 drop by more than 1%, signaling jitters over potential economic shifts.

Market watchers are closely monitoring how this inflation surge might influence broader financial trends.

Tariffs or Timing? Experts Weigh In

Some economists have long cautioned that Trump’s trade policies, particularly tariffs, could contribute to inflationary pressures.

However, others argue that price hikes at the start of the year are a common business strategy, independent of policy changes.

The debate over the root causes of inflation is likely to intensify in the coming weeks.

Federal Reserve Holds Firm on Interest Rates

Federal Reserve Chair Jerome Powell addressed lawmakers, making it clear that the Fed isn’t in a hurry to cut interest rates.

With inflation still proving stubborn, speculation is mounting that instead of rate cuts, the central bank may even consider raising rates again, as reported by Bloomberg.

Rate Cut Expectations Pushed Further Out

Traders who once anticipated a rate cut in the coming months are now adjusting their outlook, betting that the Fed won’t lower rates until December at the earliest.

This shift in expectations could have major implications for borrowing costs, mortgage rates, and overall economic momentum.

Trump’s Response: Push for Lower Rates

Trump, however, remains firm in his stance.

Taking to his Truth Social platform, he argued that interest rates should be cut, aligning his call with his tariff policies.

“Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!!

Let’s Rock and Roll, America!!!” he posted, showing no signs of backing down from his economic strategy.

What’s Next?

With inflation running hotter than expected and the Fed standing its ground, all eyes are now on upcoming economic data and policy decisions.

Will inflation cool down in the coming months, or will the Fed be forced to take more aggressive action?

Investors, businesses, and everyday Americans alike are bracing for what comes next.

This article was published on TDPel Media. Thanks for reading!

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