Paraguay Holds Interest Rate at 5.5% as Inflation Remains Stable Amid Global Uncertainty 
Bank of England Set to Hold Interest Rates as Inflation Risks and Iran War Impact Loom 
RBI Clamps Down on Rupee NDF Activity, Banks Face Steeper Losses 
Bank of Japan's Ueda Flags Low Real Interest Rates as Key Factor in Rate Hike Timing 
Bank of Korea Nominee Shin Hyun-song Signals Possible Rate Hike Amid Middle East Inflation Fears 
RBNZ Holds Rates at 2.25% as Middle East Conflict Fuels Inflation Concerns 
ECB Warns of Rising Inflation Risks Amid Iran War Energy Shock 
South Korea Central Bank Signals Cautious Policy Amid Inflation and Middle East Tensions 
Data released last Friday showed that US overall CPI remained unchanged in Jan after slipping 0.1 percent in Dec. The CPI increased 1.4 percent in the 12 months through Jan, the biggest rise since Oct 2014, after gaining 0.7 percent in Dec. We are skeptical that the rise in core CPI would be sustained. However, revisions to the inflation data shows underlying inflation a bit firmer in the last months of 2015 than previously reported.
Following the strong core CPI reading, the Fed's preferred personal consumption expenditures (PCE) price index (data next Friday), excluding food and energy, is now expected to increase 0.2 percent in Jan after slipping 0.1 percent in Dec. The core PCE is forecast rising 1.6 percent in the 12 months through Jan after increasing 1.4 percent in Dec.
"While the market remains concerned about another US recession, underlying price pressures continue to build up. Inflation numbers support the case for further rate hikes by the Fed, even if March comes too early, and leaves the market vulnerable for another repricing of the Fed outlook, though not quite yet." said Nordea Bank.
