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Consumer Prices Cool Off

The consumer price index—a closely watched inflation gauge—came in at a 6% annual increase in February, cooling from January’s 6.4%, according to The Wall Street Journal (subscription). This was the slowest rate since September 2021.

The big picture: “Stabilizing inflation along with signs of a strong labor market and improving consumer spending early this year had introduced the possibility that the Federal Reserve could raise its benchmark interest rate by a half-percentage-point at its March 21–22 meeting, after opting for a smaller increase in early February.”

  • However, the collapse of Silicon Valley Bank and other financial institutions might make the Fed extra cautious about any bigger moves next week.

The NAM says: “Overall, inflationary pressures for consumers continue to be elevated, particularly for core prices, despite encouraging signs of moderation in the data,” said NAM Chief Economist Chad Moutray.

  • “As a result, the Federal Open Market Committee will likely hike the federal funds rate by 25 basis points at its upcoming March 21–22 meeting instead of the previous expectation for a 50-basis-point increase.”
  • “It is also possible that the FOMC might pause its rate hikes in March, allowing it to reassess data and financial conditions before the May 2–3 meeting.”
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