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A key government report showed inflation in the United States rose 0.5% in January, much more than expected.
Stock market futures plunged in the moments after the number was released as expectations for interest rate cuts appear to be off the table for the near future.
The January Consumer Price Index for January was released on Wednesday morning.
The predictions were that inflation would come in at 0.3 percent.
The January CPI report often reflects price adjustments companies make to start the year, according to the Wall Street Journal.
Economists were looking to the report for hints on whether the Federal Reserve would look to cut a key interest rate at its next policy meeting.
The Fed decided to pause rate cuts last month after three straight rate reductions, holding the Fed’s short-term federal funds rate between 4.25 and 4.50 percent.
The rate influences borrowing costs for consumers, affecting the cost of car loans and credit card debts.
Mortgage rates, which are closely tied to 10-year bond rates, have not dropped as investors fear President Donald Trump’s tariffs will fuel inflation.
Federal Reserve Chair Jerome Powell said Tuesday that the U.S. central bank was in no hurry to adjust its interest rate-cut policy.
In December, the Consumer Price Index for All Urban Consumers rose 0.4 percent, seasonally adjusted, and rose 2.9 percent over the last 12 months, not seasonally adjusted.
The Dow Jones was down more than 450 points in pre-market trading. The NASDAQ was down more than 240 points. The S&P 500 was also down sharply.
