US inflation slowed to 6% year-on-year in February; its lowest level in a year and a half

The inflation slowed down in the United States in February to 6.0% year-on-year, its lowest level in almost a year and a half, at a time when the Federal Reservein charge of stopping the rise in prices, is against a rock and a hard place after the bankruptcy of Silicon Valley Bank.

From month to month, inflation fell to 0.4%, in line with analysts’ expectations, after having rebounded in January, according to the Consumer Price Index (CPI) index published this Tuesday by the work Department.

But even though this was the smallest year-on-year rise since September 2021, the level remains well above policymakers’ long-term 2% target.

The housing index was the biggest contributor…accounting for more than 70% of the increase,” the department said in a statement.

The Fed has waged an aggressive campaign to rein in runaway inflation, raising interest rates eight times since the beginning of last year to ease demand.

Although the Fed Chairman, Jerome Powellinitially said the central bank is prepared to increase the pace of rate hikes if necessary as economic data remains positive.

The inflation report was released amid turmoil in financial markets sparked by the failures of California’s Silicon Valley Bank and New York’s Signature Bank, which forced regulators to take emergency measures to shore up confidence in the Bank System.

In addition, it was released ahead of the Fed’s policy meeting next Tuesday and Wednesday, and followed a report last Friday that showed a still tight labor market, but wage inflation cooling.

Economists said Tuesday’s report remained important to policymakers despite the angst in financial markets.

(With information from Reuters)