Is February's US inflation data bad for the Fed? Wall Street analysts: there will be no impact on the second half of the start of interest rate cuts

There are many interpretations that US inflation is still strong, but most analysts don't see high inflation data lasting long, and optimists think housing costs will fall.

The US core CPI for February exceeded expectations for 2 consecutive months. Wall Street analysts generally see that this is not the situation the US Federal Reserve (Fed) wants, but most analysts say that February inflation data will not affect predictions that the US Federal Reserve (Fed) will begin cutting interest rates later this year.

Some analysts said that the core CPI in February rose 0.4% from the same month last year for two consecutive months, suggesting that the January data was not a transient anomaly. Financial blog ZeroEdge writes that February's inflation data is clearly not good news for the Fed, and it's hard to say that it's good news for the Biden administration.

This year was supposed to be a year of deflation, but the February data clearly shows that the last mile of the fight against inflation is the hardest, the article says. However, the Biden administration emphasizes the theme of “shrinkflation” (shrinkflation), and considering that supercore inflation excluding housing did not overheat as much as last month, the fact that the food price index was flat may be comforting for the Biden administration. But despite this, headline inflation remains stubborn.

The chief economist at Fitch Ratings said that's not the direction the Fed wants. Bloomberg analysts say that after January's inflation rate exceeded expectations, the February inflation rate is still robust, and Fed officials are wary of premature policy easing.

Charles Schwab's strategist said February's inflation data could be seen as a reason to leave monetary policy unchanged for a long time. After the fluctuation, the downward trend in the inflation rate seems to be smoothing out, and the Fed would like to see the inflation rate continue to fall before cutting interest rates. Apollo analysts say there is a new upward momentum in the inflation rate. The inflation rate is currently leveling off and is well above the Fed's inflation target of 2%. This means that the Fed will maintain interest rates longer.

Meanwhile, LH Meyer/Monetary Policy Analytics analystsThe CPI was slightly higher than expected, but it is said that it was not so high that the Fed could not cut interest rates in June as expected.