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US inflation rose unexpectedly to 3.2 per cent last month, in data set to be scrutinised by the US Federal Reserve as it decides when to reduce interest rates.
Economists polled by Bloomberg had expected the annual rise in consumer prices to remain unchanged from January’s rate of 3.1 per cent.
The consumer price inflation numbers are expected to play an important part in the Fed’s meeting next week, when rate-setters are due to vote on whether to cut rates from their 23-year high of 5.25 to 5.5 per cent.
The March 20 meeting will also detail how many cuts the Fed currently plans. At present, the central bank plans to reduce rates by three times this year. Markets expect three or four cuts during the course of 2024.
US stock futures were higher after Tuesday’s inflation numbers from the Bureau of Labor Statistics.
Contracts tracking the S&P 500 index rose 0.3 per cent, while those tracking the technology-heavy Nasdaq 100 increased by 0.6 per cent.
Government bonds were subdued, with the policy-sensitive two-year Treasury yield and the benchmark 10-year yield both broadly flat at 4.54 per cent and 4.1 per cent respectively.
The dollar was unmoved on the day after trimming an earlier advance.
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Tuesday’s figures showed core inflation, which excludes changes in food and energy costs, at 3.8 per cent, compared with 3.9 per cent in January. Economists had expected a fall in the metric, which is seen as a better measure of underlying price pressures, to 3.7 per cent.
The month-on-month headline figure rose from 0.3 per cent in January to 0.4 per cent last month.
This is a developing story
Source: Economy - ft.com
