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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 boost inflation. The report was welcomed by investors, who have been worried that recent cuts in rates might have boosted inflation.
The US central bank meets next week to decide their next move on interest rates. The US central bank, the Federal Reserve, meets next week to decide their next move on interest rates.
Many economists expect rates to be lowered below 3%. Many analysts expect rates to be cut to below 3%.
The inflation rate on a yearly basis was 4%. 'Fluky' numbers
The Fed is worried about that the slump in the property market and the credit crunch is pushing the economy into recession. 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.
US house prices have been falling, and job creation has turned negative. "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.
On Thursday the Commerce Department reported a big fall in retail sales for February. "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.
Retail sales fell by 0.6% last month. The Fed is worried about that a slump in the property market and a global credit crunch is pushing the economy into recession.
Analysts had been expecting a rise of 0.2% in retail sales. 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.