WASHINGTON (Reuters) – U.S. consumer prices slowed as expected in February month-on-month and year-on-year, reviving hopes of a lull in the U.S. Federal Reserve’s (Fed) rate hike, even if inflation remains at high levels.
According to data released by the Labor Department on Tuesday, the consumer price index (CPI) came in at 0.4% last month and is slowing to 6.0% year on year.
Economists polled by Reuters on average were forecasting a 0.4% month-on-month rise and a 6.0% year-on-year increase.
The basic CPI index (“core”), which excludes volatile elements such as food and energy, came out up 0.5% in February and over one year its increase is 5.5%, against a Reuters consensus of respectively +0.4% and +5.5%.
On the financial markets, the yield of ten-year Treasuries rose seven basis points, to 3.585%, and that of two years by 22.7 points, to 4.257%, after the publication of these data. Futures on Wall Street suggest an increase of 0.58% for the Dow Jones, 0.97% for the S&P-500 and 0.91% for the Nasdaq.
Traders estimate with a 23% probability that the Fed, which meets next week, will leave rates unchanged. The probability in favor of a limited increase in the cost of credit of 25 basis points is 77%.
The Fed has raised the federal funds target since March by a total of 450 basis points to 4.50%-4.75%.
(Report Lucia Mutikani; Claude Chendjou, edited by Kate Entringer)
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