Elevated inflation, combined with a strong labor market and solid consumer spending, positioned the Fed to hike the interest rate by 50 basis points this week until the sudden collapse of the Silicon Valley Bank and other financial institutions sparked calls for a potential pause.
Inflation continued to drop in February. The Consumer Price Index (CPI) came in at 6%, down from 6.4% in January, marking the smallest 12-month increase since September 2021 and the eighth straight month of improvement from its peak in June.
However, the monthly core inflation came higher than estimated at 0.5% and rose 5.5% year-over-year in February, indicating that inflation remains stubbornly high. On top of it, the jobs market continues to remain strong. Nonfarm payrolls rose by 311,000 in February, higher than the 225,000 analysts’ estimates.
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