🇺🇸❗️Cable FX Macro Weekly Note: U.S. February CPI

**As seen in Risk In The Week report 03/11/23, subscribe at cablefxm.co.uk/reports

January consumer prices slowed to 6.4% Y/y from the prior 6.5%, this was above the consensus median of 6.2%. Core inflation eased to 5.6% Y/y from the prior 5.7%, this was higher than the median survey of 5.5%. Looking at the monthly details, consumer prices jumped 0.5% from a prior 0.1%, this was the fastest pace since October as energy prices came in higher by 2.0% vs the prior -3.1%. On a positive note, services prices eased to 0.6% M/m, this component takes more than half of the weight in the CPI report. Also, shelter prices slowed to 0.7% from a prior 0.8% M/m, this component takes about a 34% weight in the CPI. The so called ‘super-core’, a series that has been signaled by Fed Chair Powell, recorded a slowdown to 0.27% M/m and 6.2% Y/y. However, the team at Bloomberg noted that housing contributed to nearly half of the monthly January gain, turning the report into another confirmation that prices remain high and inflation may prove sticky. Analysts at Nordea wrote that the momentum in different measures of inflation has weakened, however, they added that the Fed would rather see constructive evidence on a decline in price pressures. Nordea says that if the CPI report shows a further negative impulse, the 50bps hike expectations for the Fed March meeting could be challenged. Goldman Sachs says they do not expect a March rate hike after U.S. regulators stepped in to provide liquidity to SVB. The desk at J.P. Morgan says they never saw a 50bps rate hike as the most convenient move, however, they still expect the Fed to lift rates by 25bps later this month.