By Peter Nurse
Investing.com -- The January U.S. CPI release is due for release later Tuesday and could determine market expectations for what the Federal Reserve plans in terms of interest rate hikes in the near future. Kazuo Ueda looks set to become the next Bank of Japan governor, while Lael Brainard heads to the White House. Wall Street is set to open just higher, while crude weakens on the planned SPR release. Here's what you need to know in financial markets on Tuesday, 14th February.
1. U.S. CPI looms large
U.S. consumer prices increased from the prior month in January but met expectations, while the underlying trend showed inflation is slowing, likely keeping the Federal Reserve on a modest path of interest rate hikes.
The consumer price index (CPI) rose 0.5% last month, the Labor Department said on Tuesday. Data for December was revised higher to show the CPI gaining 0.1% instead of the 0.1% fall as previously reported. In the 12 months through January, the CPI increased 6.4% after advancing 6.5% in December. Economists polled by Reuters had forecast the CPI climbing 0.5% for January and rising 6.2% year-on-year.
2. Ueda nominated for BoJ governor role
The Japanese government Tuesday officially nominated Kazuo Ueda to become the next central bank governor, confirming speculation which started circulating late last week.
If confirmed, Ueda would succeed Haruhiko Kuroda, whose term ends on April 8, and would become the first postwar BoJ governor to come from academia.
He faces the tricky task of adapting his predecessor's complicated yield curve control policy, which has seen the yen fall to a 20-year low against the U.S. dollar, without derailing a fragile economic recovery.
3. Brainard heads to the White House
Lael Brainard looks to have landed a new job, with Bloomberg reporting that the Fed's vice chair is set, potentially as early as later Tuesday, to be appointed to the White House's top economic policy position.
Brainard would replace White House National Economic Council Director Brian Deese, who has announced his resignation.
It's difficult to see what policy implications such a move would have, but Brainard was widely regarded as something of a dove in the FOMC, being generally pro-stimulus. However, the wider narrative has certainly turned towards combating inflation.
4. Crude weakens on U.S. SPR release
Crude oil prices fell Tuesday, weighed by the plans of the U.S. government to release more oil from its strategic reserves.
The Biden Administration announced late Monday that it will sell another 26 million barrels of crude from the Strategic Petroleum Reserve, as part of a release mandated by Congress, adding to the record 180 million barrels released in 2022 to combat rising fuel prices.
This announcement came as something of a surprise as the Energy Department has been trying to stop some of the sales required by 2015 legislation so the reserve can be refilled.
By 06:25 ET, U.S. crude futures were down 1.7% at $78.75 a barrel, while Brent crude was down 1.3% at $85.47 a barrel.
The American Petroleum Institute is set to release its estimate of U.S. crude inventories later in the session, as is the Organization of Petroleum Exporting Countries monthly report.