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MNI US Inflation Insight - Mar'24: Softer Details But CPI Won’t Give “Greater Confidence”

EXECUTIVE SUMMARY

  • Core CPI inflation was stronger than expected in February at 0.36% M/M (cons 0.3).
  • The details were generally a little softer: upside surprise was led by used cars and airfares, whilst core services were a little below expectations and we didn’t see persistence in OER’s January strength.
  • Run rates are still troubling though, with six-month annualized rates rising 0.3pps to 3.9% for core and 5.9% for supercore. Notably, the six-month core CPI rate has pushed back above the Y/Y, whilst separate dispersion measures only saw limited moderation after January’s surge.
  • Core PCE is likely to still be running notably softer than this, but the report doesn’t give the FOMC the “greater confidence” it’s looking for that inflation is moving sustainably toward 2%.
  • Markets have moved further away from fully pricing a first cut in June (cumulative 18bp) and start to again look at three cuts in 2024 per the Dec SEP (latest 82bp) having briefly 100bps after Friday’s payrolls.
  • Whilst not a major catalyst, the Feb CPI report has been a tipping point for some of the more dovish analysts in changing their Fed rate calls.

PLEASE FIND THE FULL REPORT BELOW:

USInflationInsightMar2024.pdf

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