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US inflation print augurs for continued hawkishness

CPI print broadly in line with forecasts, although core CPI rose

14 March 2023

Just when everyone had assumed the Silicon Valley Bank collapse would push the Federal Reserve (Fed) into not raising rates next week, today’s US inflation print augurs for continued hawkishness. The CPI print came in broadly in line with forecasts with a year-on-year increase of 6.0%, although core CPI rose 0.5% over the month, slightly ahead of the 0.4% forecast, which will worry the Fed. While CPI continues the trend lower for the eighth consecutive month, it still is remarkably high by the Fed’s standards and continued hawkishness should still be warranted, or at least that is what the Fed will likely want to state. It puts the central bank in a tight spot – pouring interest rate fuel onto the supposedly “contained” banking fire might not be what investors want to see. Pausing a 25 bps hike next week only delays the inevitable though. 

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Charles Hepworth

Investment Director
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