Instant View: Tamer Feb US CPI may not budge Fed, given tariff picture

Reuters

Wed, Mar 12, 2025, 6:07 AM 4 min read

(Reuters) - U.S. user prices accrued little than expected successful February, but the betterment is apt impermanent against the backdrop of assertive tariffs connected imports that are expected to rise the costs of astir goods successful the months ahead.

The user terms scale roseate 0.2% past period aft accelerating 0.5% successful January, the Labor said connected Wednesday. In the 12 months done February, the CPI accrued 2.8% aft climbing 3.0% successful January. Economists polled by Reuters had forecast the CPI gaining 0.3% and advancing 2.9% year-on-year.

The archetypal afloat ostentation study of President Donald Trump's medication inactive near prices moving astatine levels that economists accidental are inconsistent with the Federal Reserve's 2% target.

MARKET REACTION:

STOCKS: U.S. banal scale futures extended a summation to +1.2%, pointing to a beardown unfastened connected Wall Street

BONDS: The 10-year U.S. Treasury output fell past roseate to 4.312% small changed from earlier the release, portion the two-year output was disconnected somewhat astatine 3.987 aft initially falling hard.FOREX: The dollar scale extended to 0.25% higher, and the euro eased a spot much to -0.3%

COMMENTS:

CHRIS ZACCARELLI, CHIEF INVESTMENT OFFICER, NORTHLIGHT ASSET MANAGEMENT, CHARLOTTE, NORTH CAROLINA (by email)

"The tariff-battered markets are going to respire a suspiration of alleviation this morning, arsenic higher ostentation was the lone happening that could marque things worse. With a lower-than-expected ostentation fig (both month-over-month and year-over-year), astatine slightest the Fed inactive has the flexibility to measurement successful to enactment a weaker economy, and that would beryllium bully quality for markets, which person been done the ringer successful the past period and a half.

KAY HAIGH, GLOBAL CO-HEAD OF FIXED INCOME AND LIQUIDITY SOLUTIONS, GOLDMAN SACHS ASSET MANAGEMENT, NEW YORK (by email)

“The February CPI merchandise showed further signs of advancement connected underlying inflation, with the gait of terms increases moderating aft January’s beardown release. While the Fed is inactive apt to stay connected clasp astatine this month’s meeting, the operation of easing inflationary pressures and rising downside risks to maturation suggest that the Fed is moving person to continuing its easing cycle.”

BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN

"We’re not retired of the woods, yet. We’re not adjacent successful the woods. This study volition service arsenic the baseline for seeing however overmuch tariffs are resulting successful higher user prices. Good quality connected CPI could beryllium atrocious quality for nett margins of businesses. Someone pays the terms of tariffs and the question is whether companies person the pricing powerfulness to propulsion outgo increases onto households."