CPI jumps more than expected
Inflation increased to a pace of 3.2% in the US in February, a higher-than-expected jump that reinforced the likelihood of the Federal Reserve taking a cautious approach to interest rate cuts in the coming months.
Figures released by the Bureau of Labor Statistics on Tuesday (March 12) showed growth in the Consumer Price Index (CPI) was spurred by spiking shelter and gasoline costs, with those two indexes accounting for over 60% of the overall monthly increase.
On a monthly basis, prices excluding food and energy ticked upwards by 0.4%, the second consecutive month they increased by that amount as airline fares, motor vehicle insurance, apparel, and recreation costs all rose.
CPI for all items rose 0.4% in February; gasoline and shelter up https://t.co/dJyJeKlXDJ #CPI #BLSdata
— BLS-Labor Statistics (@BLS_gov) March 12, 2024
While observers had expected inflation to remain elevated last month, February’s figure was higher than anticipated among economists polled by Bloomberg, who had forecast a rate of 3.1% – unchanged from January.
Expectations have strengthened around the beginning of rate cuts by the Federal Reserve in 2024, with the central bank set to map out the path ahead in its next announcement on March 20.
The Fed’s key rate currently sits at a 23-year high of 5.25% to 5.5% following a series of hikes in recent years aimed at tackling rapidly spiraling inflation, which surged to its highest level for 39 years in the summer of 2022.
Breaking tradition, President Joe Biden indicated in a Philadelphia speech last week that he expects the Fed to begin lowering interest rates this year. Markets and investors currently expect rate cuts to begin around the middle of 2024, most likely in June.
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