The CPI inflation in the USA was 3.2% y/y in February. The indicator has been in the range of 3.0-3.7% since June. The market consensus was 3.1%. On a monthly basis, prices increased by 0.4%. The underlying inflation was 3.8% y/y against the consensus of 3.7%.
Inflation is heading towards the target set by the FED. However, it seems that the FED is still not confident that inflation will permanently fall to the target, therefore, interest rate cuts in the coming months are not fully justified. Data shows some threats, especially pointing towards persistent inflation in basic services.
Our expected ‘higher for longer’ scenario has been fulfilled. In our baseline scenario, we anticipate the first cuts in interest rates no earlier than June but do not rule out that this could happen later.
Bartosz Wałecki, Analyst at Michael / Ström Brokerage House
