Credit Agricole CIB Research discusses the Fed policy trajectory in light of yesterday's US January CPI print.

"The January CPI report surprised to the upside on a YoY basis despite some further deceleration in YoY prints. In addition, firmer MoM readings make clear that the disinflationary process may encounter some bumps along the road. In January, headline CPI rose 0.5%, up from just 0.1% last month as the YoY pace edged down to 6.4% from 6.5%, while core rose 0.4% for a second straight month to see the YoY pace tick down to 5.6% from 5.7%," CACIB notes. 

"As a result, this report leaves the Fed firmly on track for additional hikes and supports the higher-for-longer stance that FOMC members have advocated. We continue to expect two more 25bp hikes in March and May, bringing the upper bound to 5.25%, before rates then remain on hold for the balance of 2023," CACIB adds.