January’s consumer price index exceeded expectations, leading to diminished hopes for multiple Federal Reserve rate cuts. With inflation at 3.0% and tariffs looming, Fed officials are cautious about easing policy too quickly while monitoring economic impacts.

Surprisingly strong U.S. inflation in January stoked investor fears that a heating economy and looming tariffs could corner the Federal Reserve, undercutting interest rate-cut hopes and even raising the threat of a hike.