Further support for the Federal Reserve’s ambitious rate hike arrived from US consumer prices on Wednesday after both the headline and core annualized inflation figures continued to rise. Headline inflation printed at 2.10% versus 1.70% a month earlier with rising energy and rent costs spurring the greatest upside pressure in the figure with 5.40% and 3.60% growth respectively. Core inflation, which strips away the more volatile food and energy components climbed to 2.20% in December from 2.10% a month earlier, with the figure now exceeding the Federal Reserve’s target for 14-straight months.
With unemployment and inflation having reached the Fed’s thresholds, it will be easier to continue tightening monetary policy over the coming months if both trend at current levels. With the US dollar recovering after a recent selloff, gold briefly fell below $1200 per troy ounce before rebounding.