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Abstract:NEW YORK (Reuters) – U.S. consumer prices increased in February amid sticky rental housing costs, but economists are divided on whether rising inflation will be enough to push the Federal Reserve to hike interest rates again next week after the failure of two regional banks.
NEW YORK (Reuters) – U.S. consumer prices increased in February amid sticky rental housing costs, but economists are divided on whether rising inflation will be enough to push the Federal Reserve to hike interest rates again next week after the failure of two regional banks.
The Consumer Price Index (CPI) rose 0.4% after accelerating 0.5% in January, the Labor Department said on Tuesday. That lowered the year-on-year increase in the CPI to 6.0% in February, the smallest annual gain since September 2021. The CPI rose 6.4% in the 12 months through January.
Core CPI without food and energy prices increased 0.5% after rising 0.4% in January. Year over year core CPI gained 5.5% vs 5.6% in January. Economists polled by Reuters had forecast monthly CPI and core CPI up 0.4%.
MARKET REACTION:
STOCKS: U.S. stock index futures slightly paired gains and were last up 0.87%, pointing to a firm open on Wall Street BONDS: U.S. Treasury yields were mixed, with 2-year note last up at 4.252, and the 10-year note a bit higher at 3.5827%FOREX: The euro remained flat against the U.S. dollar
COMMENTS:
KIM FORREST, CHIEF INVESTMENT OFFICER, BOKEH CAPITAL PARTNERS, PITTSBURGH
“In light of the weekend‘s events, I don’t think it could have been a more perfect number.”
“Its showing that inflation is trending the way that the Fed has kind of expected and wanted.”
“If it were a hot number, that would have probably driven the markets lower … but this number kind of shows that the lagging effects of raising interest rates are working.”
“For investors that are investing for longer than 15 minutes, it doesn‘t really matter. The Fed’s not going to be super aggressive and hurt banks more by raising interest rates.”
ROBERT PAVLIK, SENIOR PORTFOLIO MANAGER, DAKOTA WEALTH, FAIRFIELD, CONNECTICUT
“Both the headline and core CPI number probably continue along with the thinking that the Fed is likely going to be either pausing or at the very least raising by only 25 basis points at the next meeting.”
“If the Fed‘s more concerned about credibility, then they’re going to have to raise by at least 25 basis points. But I think the credibility concern is probably secondary to the concerns about the overall market.”
“I think they‘re going to probably be on hold because they’re worried about the issue of contagion and the precarious position that it puts the banks in with regards to their balance sheets. If the Fed‘s worried about saving face or coming off as wishy washy or worried about losing credibility with the market, they’re going to raise by 25 basis points. I think that‘s what they should do, but they probably won’t.”
(Compiled by the Global Finance & Markets Breaking News team)
Disclaimer:
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