U.S. consumer prices likely rose at a solid pace in February amid sticky rental housing costs, but economists are divided on whether the data will be enough to push the Federal Reserve to hike interest rates again next week after the failure of two regional banks.
The Consumer Price Index likely increased by 0.4% last month after accelerating 0.5% in January, according to a Reuters survey of economists. That would lower the year-on-year increase in the CPI to 6.0% in February, which would mark the smallest year-on-year rise since September 2021. The CPI rose at a 6.4% pace in the 12 months through January.
"It should be noted that these problems were largely set up by over-easy Fed policy for many years and are now being triggered by excessive tightening," said David Kelly, chief global strategist at JPMorgan Funds in New York. "In light of this reality, it is possible that the Fed will now halt its tightening cycle."
Independent measures, however, suggest rental inflation is cooling, leading many economists to believe that price pressures could decelerate considerably in the second half of the year. The rent measures in the CPI tend to lag the independent gauges.
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