November 30, 2023

The US should have posted a strong increase in consumer inflation in February – a mix wave

By Lucia Muticani

WASHINGTON (Reuters) – U.S. consumer prices are likely to rise at a solid pace in February as housing costs rise, but economists are divided on whether it will be enough to pressure the Federal Reserve to raise interest rates again next week after two defeats. Regional banks.

A Labor Department report on Tuesday said commodity inflation is expected to have picked up somewhat as prices of used motor vehicles rebounded early, forcing regulators at Silicon Valley Bank in California and Signature Bank in New York to take emergency steps to bolster confidence in the banking system amid financial market turmoil fueled by the collapse.

It comes a week before the central bank begins its policy meeting, and follows a report last Friday that showed a still tight jobs market but slowing wage inflation. Despite jitters in financial markets, economists said Tuesday’s report was important for policymakers.

“If the Fed meeting happened today, you have to say the Fed would do nothing,” said James Knightley, chief international economist at ING. “If actions by the Fed, the Treasury and the FDIC (Federal Deposit Insurance Corporation) help calm the markets, you still have to say a 25 basis point increase is the most likely outcome.”

The consumer price index rose 0.4% last month, up from 0.5% in January, according to a Reuters poll of economists. This would reduce the year-on-year increase to 6.0% in February, marking the weakest pace since September 2021. The index rose at a pace of 6.4% in the 12 months to January.

The index rose to 9.1% in June on a year-on-year basis, the largest increase since November 1981. Monthly inflation has been rising twice as much as economists say is needed to bring inflation back to the central bank’s 2% target.