The consumer price index number further complicates market expectations of Fed rate cuts and muni investors may want "to keep their powder dry" until they have a better idea of the Fed's timing, said CreditSights' Pat Luby.

The Federal Reserve expects to cut interest rates three times this year, some say as early as March, if data alllow those moves. Following the Jan. 30-31 FOMC meeting, Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions, will provide his take on the meeting and Chair Jerome Powell's press conference.

A majority of those polled at The Bond Buyer's 2024 National Outlook Conference also felt issuance would increase moderately this year, to between $400 billion and $450 billion.

"Yields are attractive, and there's going to be a lot of demand and there's not going to be a lot of bonds," said Scott Diamond, co-head of the municipal fixed income team at Goldman Sachs.

The discussion of rate cuts, both timing and amount, has analysts offering varying estimates.

"I believe policy is set properly," Waller said. "It is restrictive and should continue to put downward pressure on demand to allow us to continue to see moderate inflation readings."

The December consumer price index came in slightly stronger than expected, perhaps eliminating the possibility of a rate cut in March, analysts said.

The Fed, financial markets, the upcoming election and AI took center stage on at the Executives' Club of Chicago's Annual Economic Outlook panel.

The muni market enters this year from a relative position of strength, said Jeff Lipton, managing director and head of municipal research and strategy at Oppenheimer.

Musalem, an economist, is a former executive vice president of the Federal Reserve Bank of New York.