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US inflation cooled in February | US inflation cooled in February |
(10 minutes later) | |
US inflation slowed in February, raising hopes that the US Federal Reserve will cut interest rates again. | US inflation slowed in February, raising hopes that the US Federal Reserve will cut interest rates again. |
The US Labor Department reported no change in consumer prices last month, against expectations of an 0.3% increase from the previous month. | The US Labor Department reported no change in consumer prices last month, against expectations of an 0.3% increase from the previous month. |
The report was welcomed by investors, who have been worried that recent cuts in rates might have boosted inflation. | |
The US central bank, the Federal Reserve, meets next week to decide their next move on interest rates. | |
Many analysts expect rates to be cut to below 3%. | |
'Fluky' numbers | |
Economists say this latest report does not mean that inflation has not gone away, and point to the fact that inflation on a yearly basis was 4% in February. | |
"You got a decrease in energy prices, which obviously is fluky and won't last, you got a deceleration in some food items which isn't going to last and seems flukish," said Michael Darda, Chief Economist at MKM Partners. | |
"I don't think this matters, the Fed was going to cut 75 basis points (0.75%) next week regardless. This data just gives them more cover to do that it with a straight face," he added. | |
The Fed is worried about that a slump in the property market and a global credit crunch is pushing the economy into recession. | |
Recent reports have shown that US house prices have been falling, and job creation has turned negative. | |
On Thursday, the Commerce Department reported a that retail sales fell by 0.6% last month. Analysts had been expecting a rise of 0.2% in retail sales. |
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