Ahead of the Federal Open Market Committee’s meeting next week, the latest consumer price index released Wednesday showed the annual inflation rate dropped in February to 2.8 percent.
It was a small drop from the 3 percent rate in January.
The total inflation numbers were less than all-items-less-food-and-energy index, which was at 3.1 percent.
The CPI numbers followed the latest jobs numbers released last week, with the unemployment rate changing little at 4.1 percent in February. The economy added 151,000 jobs.
The FOMC in January held its target interest rates at 4.25 and 4.5 percent. That followed the committee cutting rates more than 100 basis points in the past three meetings.
“My colleagues and I remain squarely focused on achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people,” said Federal Reserve Chairman Jerome Powell. “The economy is strong overall and has made significant progress toward our goals over the past two years. Labor market conditions have cooled from their formerly over-heated state and remain solid. Inflation has moved much closer to our 2 percent longer-run goal, though it remains somewhat elevated. In support of the goals, the Federal Committee decided to leave the policy interest rate unchanged.”
The FOMC will meet March 18-19 to determine the next step on interest rates after receiving the latest economic numbers.
Powell said he expects the Fed to remain cautious on changing rates, during his remarks March 7 at the University of Chicago Booth School of Business 2025 U.S. Monetary Policy Forum in New York.
“Policy is not on a preset course. If the economy remains strong but inflation does not continue to move sustainably toward 2 percent, we can maintain policy restraint for longer,” Powell said. “If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy accordingly. Our current policy stance is well positioned to deal with the risks and uncertainties that we face in pursuing both sides of our dual mandate.”
Auto rates remain high despite the cuts by the Fed in the past year. Cox Automotive reported used car rates were at 14.73 percent in February and new car rates at 9.69 percent.
