The U.S. January CPI exceeded expectations, and risk assets will still face uncertainty in the short term

Institutional analysis points out that the US CPI rose more than expected in January, exacerbating people's concerns about persistent inflationary pressures and reinforcing the Federal Reserve's cautious stance on easing monetary policy. Policymakers have repeatedly emphasized that before considering rate cuts, there needs to be sustained evidence showing inflation returning to a target level of 2%. The latest data shows that progress against inflation is still uneven, making it harder for the Fed to pivot in the short term. As inflation rates are higher than expected, the near-term outlook for risk assets remains uncertain. As traders adjust their expectations for rate cuts, stock markets face new downward pressure. Bond yields may continue to rise as markets reflect longer periods of tight monetary policy. Unless upcoming inflation reports show significant cooling off, it is unlikely that the Fed will cut rates soon, which will keep volatility high in both stock and fixed income markets.