US inflation unexpectedly rises to 3.2%

The news: US headline inflation increased unexpectedly to 3.2% during February, remaining well ahead of the Federal Reserve's 2% inflation target.

The numbers: The data released overnight shows US core inflation, which excludes changes in food and energy costs, was 3.8% during February compared with 3.9% the month prior. Economists had expected a fall to 3.7%. The figure shows a 0.4% climb from January and a 3.8% increase from one year ago. Core CPI is a preferred measure than overall CPI.

The context: The US Bureau of Labor Statistics’ inflation data will be closely scrutinised by the Federal Reserve ahead of its upcoming meeting on March 20 next week. The central bank is expected to hold rates steady at its next meeting, having said it plans to wait until it sees signs of cooling inflation before beginning to make cuts.

Markets have forecast three or four cuts to be made during the course of 2024, but continue to look for clearer signs around the timing of upcoming cuts from June and beyond.