- Joined
- Sep 14, 2007
- Messages
- 617
U.S inflation rose 0.4% in February, bringing the year-over-year rate to 0.2%. The market was expecting the rise to match January’s 0.3% monthly rise, with the year-over-year rate remaining at 0.0%. The core rate remained at 0.2% for the second month in a row (1.8% year-over-year), while markets anticipated a deceleration to 0.1%, leaving the year-over-year year rate at 1.7%.
Gasoline prices rose for a second month in a row, increasing 8.3% in February. This was somewhat offset by food prices, which fell 0.1% on the month.
The core rate, which excludes food and energy, rose by 0.2% in February, bringing the year-over-year rate up to 1.8%. The increase in prices was broad-based with all major categories posting gains except personal computers. Some of the increase was due to a 1.3% rise in the volatile apparel category. Motor vehicle prices rose 0.5%, with new vehicles up 0.8% — their strongest monthly rise since November 2004.
We anticipate that continued moderate inflation combined with the weakness in economic growth will prompt the Fed to announce its intent to leave its target Fed Funds rate at the current and highly simulative 0% to 0.25% range at the conclusion of its two-day meeting later on today. The accompanying statement will be monitored closely for any shift from the Fed’s earlier stated position of being prepared to purchase Treasuries if conditions warrant.
Josh Heller, Economist, RBC Economics Research
Gasoline prices rose for a second month in a row, increasing 8.3% in February. This was somewhat offset by food prices, which fell 0.1% on the month.
The core rate, which excludes food and energy, rose by 0.2% in February, bringing the year-over-year rate up to 1.8%. The increase in prices was broad-based with all major categories posting gains except personal computers. Some of the increase was due to a 1.3% rise in the volatile apparel category. Motor vehicle prices rose 0.5%, with new vehicles up 0.8% — their strongest monthly rise since November 2004.
We anticipate that continued moderate inflation combined with the weakness in economic growth will prompt the Fed to announce its intent to leave its target Fed Funds rate at the current and highly simulative 0% to 0.25% range at the conclusion of its two-day meeting later on today. The accompanying statement will be monitored closely for any shift from the Fed’s earlier stated position of being prepared to purchase Treasuries if conditions warrant.
Josh Heller, Economist, RBC Economics Research