US CPI: Look for a 0.2% increase in February - BBH

Analysts at BBH suggest that US reports February CPI and January’s outsized 0.5% monthly increase will not be repeated.  

Key Quotes

“Economists look for a 0.2% increase in February, which would lift the headline y/y pace to 2.2% from 2.1%.  Due to the base effect, the expected 0.2% mm rise in the core rate will keep the y/y rate steady at 1.8%.”

Yet as we have noted before, the high frequency data will not impact Fed policy near-term.  Another 25 bp hike this month is universally priced in, as are two more hikes later this year.  We continue to believe that the Fed will maintain its current dot plot trajectory at the March 21 meeting, but could tweak its growth forecasts higher.  The OECD noted that tax cuts should boost business investment and add as much as 0.75 percentage points to US growth in 2018 and 2019.”

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