- Annual inflation rose slightly from 3.2 percent to 3.2 percent in February
- The numbers remain well above the Federal Reserve’s 2 percent target
Inflation rose slightly to 3.2 percent in February, as prices were pushed up by house prices and gas prices.
Core prices, excluding volatile products such as food and energy, rose by 0.4 percent compared to January.
Wall Street was mixed in pre-market trading Tuesday ahead of figures released by the Bureau of Labor Statistics. Stock futures rose slightly after the report.
Tuesday’s figures showed inflation rose to 3.2 percent, up from 3.1 percent in January.
The figures came in above Wall Street expectations of 3.1 percent and remain well above the Fed’s 2 percent target.
A month ago, a better-than-expected report on consumer inflation sent financial markets into turmoil.
The inflation rate plays a big role in whether the Federal Reserve will cut interest rates sooner rather than later. Pictured is Chairman Jerome Powell
Inflation rose slightly to 3.2 percent in February as prices were pushed up by house prices and gas prices
Fed Chairman Jerome Powell said last week that the Fed is “not far” from being confident enough about inflation to cut rates.
Cuts to the Fed’s key interest rate, which is at its highest level since 2001, would ease pressure on the economy and financial system while boosting investment prices.
The general expectation among traders is that the Fed will start cutting rates in June, and stock prices are being boosted by these expectations and by signals that the economy remains remarkably resilient.
Mohit Kumar, chief economist and strategist for Europe at Jefferies, said the market is “awaiting” Tuesday’s inflation data. He added that he expects a first Fed cut in June, in line with markets.
“An inline or weaker print would strengthen our view of the June cut and be welcomed by markets,” he said.
Markets are not considering a Fed rate cut at next week’s meeting, but a more than 60 percent chance of a rate cut in June, the CME FedWatch Tool showed.
