Announced this morning, the Consumer Price Index increased 0.4% in February, as expected, and is 1.7% higher on annual basis. Prices for Gasoline were again higher for the month, increasing 6.4%, while prices for Used Cars and Trucks, Apparel, and Medical care were all lower. The core rate, which excludes prices for food and energy, increased just 0.1% in February and is up 1.3% on an annual basis, both slightly below analyst estimates. Overall, inflationary pressures remain benign, especially at the core level which came in below expectations. Even with the recently passed stimulus package, there is a long road ahead for core rates to get to and above the 2% level, given the slack in the labor market and over 9 million jobs that were lost in the pandemic that have still not returned. The Federal Reserve is likely to remain accommodative for the foreseeable future. In all, bond yields ticked lower this morning and equity markets are higher in morning trading.
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