The consumer price index (CPI), which measures inflation by comparing the change in price over time for a variety of consumer goods and services, has risen by 0.4% in February. While the CPI increased in February, it didn't increase as much as it did in January when it increased by 0.5%.
An inflation report from a few days ago made people believe that the Federal Reserve would boost the size of its next interest rate hike to 50 base points from the quarter point that they had implemented in February. However, with the market's attention being drawn to bank failures, economists who doubt the Federal Reserve will even stick with a quarter point hike in March.
Kevin Cummins, a chief U.S. economist at NatWest Markets, expected the economy to fall into a recession towards the second half of this year. However, he believes with the recent bank failures that the recession could come much sooner now if banks pull back on lending. Cummons thinks that the slowdown of our economy could reduce inflation. As for now, economists say that shelter and food costs continued to rise in February.
Tom Simons, a money market economist at Jefferies, believes that the Federal Reserve will stick to the quarter-point rate hike in March. He expects that due to the uncertainty, the markets will focus on one Federal Reserve meeting at a time.
Written by: Nate Birck