Consumer Prices Index Was Virtually Flat In February
U.S. consumer prices were unchanged on a seasonally adjusted basis in February, with the Labor Department reporting that falling energy prices offset increases in prices of cars, health care, and food. The almost-flat (+0.1%) reading of the consumer price index (CPI) was in line with expectations of economists surveyed by Marketwatch. Most of the current deceleration in inflation has been due to housing costs, and with home prices apparently stabilizing, “the likelihood of any meaningful deceleration in underlying price pressures going forward from here seems quite limited, despite a still-wide output gap,” Morgan Stanley economists David Greenlaw and Ted Wieseman wrote in a research note.
Meanwhile, Federal Reserve officials once again signaled they believe the U.S. recovery isn’t strong enough to justify an end to record-low interest rates. Central bankers this week reiterated they would keep their benchmark interest rate “exceptionally low” for an extended period, noting that – while the economy is improving slowly – employers remain reluctant to hire, homebuilding is “depressed,” and inflation will be “subdued for some time.” “It’s very difficult to make a strong case that the economy is in a self-sustaining recovery until we have job growth,” observed Advisors Capital Management Chief Investment Officer Charles Lieberman, a former Fed official. [Sources: Marketwatch, Bloomberg]
From MediaEconomy Digest, © 2010. Published by Bunzel Media Strategies
