25 Mar 2015
US inflation: have we seen the trough? – ING
FXStreet (Barcelona) - Rob Carnell, Chief International Economist at ING, comments on the US inflation data release, noting that the climb away from negative territory eases some problems for the Fed.
Key Quotes
“February inflation data has just dragged the year-on-year headline inflation rate out of negative territory, removing what could have been a presentational problem for the Fed when thinking about raising policy rates later this year.”
“That said, the Fed has been clear that all that needs to happen is for inflation to be heading back towards 2.0% YoY, whilst core inflation remains close to 2.0% (core inflation rose to 1.7% YoY in February from 1.6% in January, so no problem there).”
“As such, the conditions that already exist today are no impediment to rates rising, which we continue to think will happen at the June FOMC meeting – April was effectively ruled out at the last FOMC meeting.”
“Indeed, in the absence of a further decline in retail gasoline prices, or in US crude oil prices, then even the headline rate should begin to move back towards 2.0% as base effects start to recede over the course of the year.”
Key Quotes
“February inflation data has just dragged the year-on-year headline inflation rate out of negative territory, removing what could have been a presentational problem for the Fed when thinking about raising policy rates later this year.”
“That said, the Fed has been clear that all that needs to happen is for inflation to be heading back towards 2.0% YoY, whilst core inflation remains close to 2.0% (core inflation rose to 1.7% YoY in February from 1.6% in January, so no problem there).”
“As such, the conditions that already exist today are no impediment to rates rising, which we continue to think will happen at the June FOMC meeting – April was effectively ruled out at the last FOMC meeting.”
“Indeed, in the absence of a further decline in retail gasoline prices, or in US crude oil prices, then even the headline rate should begin to move back towards 2.0% as base effects start to recede over the course of the year.”