US core inflation beats forecasts for second month

Core inflation in the US exceeded estimates for the second month, confirming the Fed’s cautious interest rate cut view. Inflation in the US was 0.4 percent monthly and 3.2 percent annually in February. Analysts who participated in the Bloomberg survey expected inflation to be 0.4 percent monthly and 3.1 percent annually. Core inflation, which does not include energy and food prices, was 0.4 percent monthly, compared to the expected 0.3 percent, and 3.8 percent annually, compared to the expected 3.7 percent. The increase in housing prices was the most influential element in the monthly increase in inflation. The housing index increased by 0.4 percent monthly and 5.7 percent annually in February. Gasoline prices also increased by 3.8 percent monthly and decreased by 3.9 percent annually in February. The data released signaled that inflation is still persistently high and that Central Bank officials will refrain from premature easing. Fed Chairman Jerome Powell stated in his speech last week that they wanted to make sure that inflation was on target and said, “Once we have that confidence, which we are close to, it will be appropriate to start cutting interest rates.” Some Fed officials have stated that they want to see a more general decline in inflation. Producer inflation data will be released before the Fed’s interest rate decision next week. The Fed is expected to keep interest rates steady at its 5th meeting.