US consumer prices rise solidly in February – WorldNews WAALI

WASHINGTON: US consumer prices rose in February amid sticky rental housing costs, but economists are divided over whether rising inflation will be enough to push the Federal Reserve to raise interest rates again next week after the failure of two regional banks .

The Consumer Price Index (CPI) rose 0.4% last month after accelerating 0.5% in January, the Labor Department said on Tuesday. That reduced 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 to January.

The annual CPI peaked at 9.1% in June, the biggest increase since November 1981.

Excluding the volatile food and energy components, the CPI increased 0.5% after rising 0.4% in January. In the 12 months to February, the so-called core CPI gained 5.5% after advancing 5.6% in January.

Economists polled by Reuters had forecast both the CPI and core CPI to climb 0.4% monthly. Monthly inflation is rising at twice the rate economists say is needed to bring inflation back to the Fed’s 2% target.

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The inflation report was published amid turmoil in the financial market triggered by the collapse of Silicon Valley Bank in California and Signature Bank in New York, which forced regulators to take emergency measures to boost confidence in the banking system.

It was also released ahead of the Fed’s policy meeting next Tuesday and Wednesday, and followed a report last Friday showing a still tight labor market, but cooling wage inflation. Economists said Tuesday’s report remained important to policymakers despite the angst in financial markets.

Fed Chairman Jerome Powell told lawmakers last week that the US central bank would probably need to raise rates more than expected, leading financial markets to expect a half-percentage-point increase on the table next week.

But those expectations were dialed back to 25 basis points after the employment report.

Although financial markets on Tuesday still expected a quarter percent increase, according to CME Group’s FedWatch tool, fear of contagion from the banking crisis prompted some economists, including those at Goldman Sachs, to expect the Fed next week delay his fastest money. cycle of policy tightening since the 1980s.

The Fed has increased its benchmark overnight interest rate by 450 basis points since last March from the near-zero level to the current range of 4.50%-4.75%.