The data released by the US Department of Labor on the 12th showed that the US consumer price index (CPI) rose 0.4% month on month in February this year, 0.1 percentage points higher than that in January, the largest increase since September last year, mainly due to the rise in energy prices and living costs. Analysts pointed out that the high inflation rate has increased the pressure on American people's lives, and the Federal Reserve may maintain the federal funds rate at a high level for a longer time.

Data shows that the US CPI rose by 3.2% year on year in February, exceeding expectations for two consecutive months, far higher than the long-term inflation target of 2% set by the Federal Reserve, and also higher than the 3.1% in January. Excluding volatile food and energy prices, core CPI rose 0.4% month on month, higher than the expected 0.3%.

Bloomberg economists Anna Wang and Stuart Paul believe that core inflation is still overheated, and the trend of inflation contraction since the second half of last year "seems to have stopped".

In recent years, the biggest challenge facing the US economy has been the rising inflation rate, which once reached its historical peak. In particular, food prices, which are closely related to people's livelihood, continue to rise, putting heavy pressure on the lives of ordinary people.

According to the data of the US Department of Agriculture, the price of groceries has risen by 25% in the past four years, exceeding the overall inflation rate of 19% in the same period. Last year, the price of groceries rose by 5%, including meat, dairy products and oil.

A poll conducted by the Pew Research Center in January shows that up to 73% of the respondents are disappointed in the economic policies of the Biden administration, which is far higher than the other 19 policy areas such as counter-terrorism and immigration. Most respondents said that they are highly concerned about food and consumer goods prices, housing costs and energy prices.

According to the poll conducted by Gallup on the eve of the "Super Tuesday" primary election on March 5, about one third of voters believe that solving the economic problem is the top priority of the US government, and 11% of them believe that the high cost of living and the persistent inflation crisis are the top priorities.

The market is concerned about whether the rebound in inflation since the beginning of this year will prompt the Federal Reserve to adjust its interest rate cut expectations. A tracking data from the Chicago Mercantile Exchange shows that after the release of inflation data in February, the market generally expects the Federal Reserve to keep interest rates unchanged at the monetary policy meetings in March and May, and it is expected that the first interest rate cut will be in June.

Some analysts believe that the higher than expected CPI increase in February may weaken the Federal Reserve's confidence that inflation is rapidly approaching the target, so the Federal Reserve may maintain interest rates between 5.25% and 5.5% for a longer time.

Kathy Jones, chief fixed income strategist of Credit Suisse Financial Group, believes that the slowing downward trend of inflation may be the reason for the Federal Reserve to keep tightening monetary policy for a longer time.

Neil Kashkari, President of the Federal Reserve Bank of Minneapolis, said in a media interview earlier that if inflation is more stubborn than expected, the Federal Reserve will give priority to maintaining interest rates for a longer period of time.

According to the economic outlook forecast released by the Federal Reserve in December last year, most Federal Reserve officials expect that if the inflation rate continues to move towards the target of 2%, interest rates are expected to be cut three times in 2024, a total of 75 basis points. But with inflation rebounding, it remains to be seen whether the Federal Reserve will cut interest rates three or two times this year.

However, some economists believe that the short-term fluctuation of inflation should not be the reason for the Federal Reserve to adjust its policy expectations. Eric Rosengren, former president of the Federal Reserve Bank of Boston, pointed out that the February data was not enough to allow the Federal Reserve to significantly adjust inflation expectations, and the forecast of interest rate cuts should not be changed.

Source: Xinhua News Agency

Edited by Xie Yutong

Second instance Chen Chaohui

Third review Yang Yi