February Inflation Data

March 14, 2023
A pile of $1 bills

Even amid current banking scares, the Fed will still prioritize price stability over growth and likely hike rates by 0.25% at the upcoming meeting.

Chief United States economist at LPL Financial, Jeffrey Roach, on how new inflation data may impact interest rates. The February Consumer Price Index (CPI) showed a sharp increase in shelter costs.

Why It Matters: The Consumer Price Index (CPI) measures a mixed basket of costs of goods and services in the U.S. and is used as an important gauge of inflation (high inflation = your dollar buys you less). The cost of goods and services in February was 6% higher than last year and 0.4% higher than January. The Federal Reserve – also known as the U.S. Central Bank – is expected to raise interest rates next week in an attempt to bring inflation down to their 2% target rate.

Something To Consider: The CPI report does not reflect the economy at the time of the Silicon Valley Bank and Signature Bank collapse; while some signs of a cooling economy have emerged, The WSJ writes that recent bank failures "could complicate the central bank’s approach to raising rates this year, if the crisis were to spread further in the financial system."

Inflation gauge increased 0.4% in February, as expected and up 6% from a year ago (CNBC)

U.S. Inflation Cooled in February as Fed Confronts Bank Failures (The Wall Street Journal)

by Jenna Lee,