Investors are holding their breath in fear of a stock market crash ahead of the February consumer price index (CPI) due tomorrow, March 12. The much-anticipated inflation report will be released to a horde of anxious Wall Street traders, still hoping for a rate cut later this month.
What do you need to know about this week’s major economic data release?
Well, this time around, inflation is expected to have heated up again this month. Indeed, after the worse-than-expected January CPI report released last month, it seems rising gasoline prices are expected to put more upward pressure on the overall price level.
Economists expect the CPI to increase 0.4% month-over-month. That’d be up from last month’s 0.3% jump, with the annual rate holding firm at 3.1%, the same as in January.
“We expect the data to show that while inflation remains frustratingly high, the underlying trend is not strengthening,” Wells Fargo economists noted this week.
Powell Puts Pressure on Inflation Data as Stock Market Crash Fears Loom
As always, the paramount importance of this week’s inflation report lies in the Federal Reserve. Wall Street has been collectively crossing its fingers for rate cuts this year, while the Fed has largely refused to play ball.
At the January policy meeting, Fed officials wanted to wait for “more good data” before opting to cut rates. It’s expected the central bank will maintain this attitude at this month’s rate decision, scheduled for March 19-20.
Fed Chair Jerome Powell’s recent Capitol Hill visits have put added pressure on inflation as he emphasized the Fed’s current “wait and see” attitude as it pertains to rate cuts. As Powell told the Senate Banking Committee:
“We are waiting to become more confident that inflation is moving sustainably down to 2%. When we do get that confidence, and we’re not far from it, it will be appropriate to begin to dial back the level of restriction so that we don’t drive the economy into recession.”
That said, according to the CME Fed Watch Tool, interest rate traders are pricing in just a 3% chance of a rate cut this month.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
