Inflation Steady, Fed Rate Cut Unlikely
What happened
February's CPI showed inflation holding at 2.4%, above the Fed's 2% target, making rate cuts less likely at the March 17-18 meeting.
Why it matters
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in February, after a 0.2 percent rise in January. The index for shelter was a major factor, rising 0.2 percent in February. The food index also increased, rising 0.4 percent. Economists had anticipated the 2.4% year-over-year CPI increase. Core CPI, excluding food and energy, also matched expectations, rising 2.5% annually. This is before the full impact of the Iran war on oil prices is reflected in the CPI. The Fed has already cut interest rates by 1.75 percentage points, and is expected to hold steady at the next three meetings. Some analysts believe that progress in lowering inflation is stalling. This could favor real economy assets like energy and commodities.
Key numbers
- February's CPI showed inflation holding at 2.4%, above the Fed's 2% target, making rate cuts less likely at the March 17-18 meeting.
- The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in February, after a 0.2 percent rise in January.
- The index for shelter was a major factor, rising 0.2 percent in February.
- The food index also increased, rising 0.4 percent.
What happens next
- The Fed has already cut interest rates by 1.75 percentage points, and is expected to hold steady at the next three meetings.
- This could favor real economy assets like energy and commodities.
- February's CPI showed inflation holding at 2.4%, above the Fed's 2% target, making rate cuts less likely at the March 17-18 meeting.
Sources
Quick answers
What happened in Inflation Steady, Fed Rate Cut Unlikely?
February's CPI showed inflation holding at 2.4%, above the Fed's 2% target, making rate cuts less likely at the March 17-18 meeting.
Why does Inflation Steady, Fed Rate Cut Unlikely matter?
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in February, after a 0.2 percent rise in January. The index for shelter was a major factor, rising 0.2 percent in February. The food index also increased, rising 0.4 percent. Economists had anticipated the 2.4% year-over-year CPI increase. Core CPI, excluding food and energy, also matched expectations, rising 2.5% annually. This is before the full impact of the Iran war on oil prices is reflected in the CPI. The Fed has already cut interest rates by 1.75 percentage points, and is expected to hold steady at the next three meetings. Some analysts believe that progress in lowering inflation is stalling. This could favor real economy assets like energy and commodities.
