There is a great inflation report. What to expect

The problem of highly concerned by the fact that President Donald Trump’s tariff policy will aggravate inflation, the report on Wednesday may be softly encouraging.

The Consumer Price Index is forecast to show an increase of 0.3% for a wide range of goods and services throughout the largest economy in the world. This projection takes both for measures of all elements and the main index that eliminates volatile food and energy prices.

The annual basis would put 2.9%on the headlines inflation, and the main reading is 3.2%as at 0.1 percentage points lower than in January.

Good news is that the rates are a stable but rather slow decrease in inflation over the last year. The bad news is that both are still much higher than the 2% target of the federal reserve system, most likely holding the Central Bank when it met next week.

“We expect a broad slowdown with weak basic goods and services,” the Morgan Stanley Economist Diego Anzoateagui said. “Why is still a sublime? For three reasons: (1) We expect that used cars rising from past forest fires, (2) according to our analysis, some goods and services show residual seasonality in February, and (3) We believe that supply restrictions are holding inflation in the air.”

The big question is now where everything goes from here.

Trump’s tariff is moving made a fractures of the market both Inflation growth and slow economic growth. Since Fed officials are historically more tuned to the inflation sides of the double mandate for pricing stability and full employment, a long period of high prices can put the Fed in Baku.

However the chairman of the federal reserve system Jerom Powell And his colleagues noted that, in their opinion, the tariffs in historical terms were a one -time increase in prices, not by fundamental inflation drivers. In this case, this time, politicians can view any price calculations from trade policy and continue to reduce rates because the markets are forecast this year.

Goldman Sachs economists expect the Fed to keep up until the policy is more clear, and then probably reduce the benchmark of the Central Bank by one and a half percentage in the end of this year.

“We see further disinfecting in the pipeline from the balance in the car, the housing and the labor market rental markets, although we expect displacements from catch-up in health care and raising tariffs from the tariff policy,” the firm’s note reads.

The Labor Statistics Bureau will release the CPI report at 8:30 am.