Breaking News
Investing Pro 0
⏰ React to the Market Faster with Custom, Real-Time News Get Started

Easing inflation solidifies expectations for Fed's February rate hike

Economy Jan 12, 2023 05:14PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters.

By Liz Moyer -- Easing inflation is feeding expectations that the Federal Reserve will lift interest rates by a quarter of a percentage point next month, a slower pace of tightening than at its meetings last year.

The CME FedWatch Tool, which is based on CME Group’s 30-Day Fed Fund futures prices, shows 93.2% believe rates will rise 0.25 percentage points, to a range of 4.50% to 4.75%, when the Fed makes its next decision Feb. 1.

December's inflation report showed prices cooled a bit last month, with the consumer price index rising 6.5% over a year, compared with a 7.1% rise in the 12 months ending in November.

Fed officials speaking at separate events appeared to agree that further interest rate increases could come in smaller increments than the Fed's aggressive actions last year.

Philadelphia Fed President Patrick Harker told a Chamber of Commerce gathering in Malvern, Pa., that the central bank could raise rates at a slower pace than it did last year.

“I expect that we will raise rates a few more times this year, though, to my mind, the days of us raising them 75 basis points at a time have surely passed,” Harker said, referring to four successive rate increases last year of three-quarters of a percentage point. The Fed slowed that pace in December with a half-point increase.

“In my view, hikes of 25 basis points will be appropriate going forward,” Harker said.

Just 6.8% believe there will be a half-percentage point increase next month, according to the CME FedWatch Tool, down from 23.3% who thought that on Wednesday.

The Fed has been consistent in its message that it wasn’t ready to pause or pivot on rates anytime soon as it works to tame inflation.

Richmond Fed President Thomas Barkin told a meeting of the Virginia Bankers Association that it “makes sense to steer more deliberately as we work to bring inflation down,” a remark that also suggests he believes further rate increases can be smaller than they were last year.

Bloomberg reported that Barkin said he’s thinking about an interest-rate path that is “slower, but longer and potentially higher.”

St. Louis Fed President James Bullard said policy makers should work quickly to get rates above 5% to tame inflation. Speaking virtually at an event sponsored by the Wisconsin Bankers Association, Bullard said “it would be appropriate to get there as soon as possible” and stay there.

“I don’t really see any purpose in dragging things out through 2023,” he said.

Easing inflation solidifies expectations for Fed's February rate hike

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Alan Rice
Alan Rice Jan 12, 2023 6:57PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Note: National inflation rate is still over 3 times The Federal Reserve's target. (500 bps. would be better.)
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email