U.S. CPI Unexpectedly Rises to 3.2% Annual Pace in February

BY Coindesk | ECONOMIC | 03/12/24 08:37 AM EDT By Stephen Alpher

The U.S. Consumer Price Index rose faster than expected last month, with the year-over-year pace up to 3.2% versus estimates for 3.1% and January's 3.1%, the government reported Tuesday morning. The core rate ? which strips out food and energy costs ? dipped a bit, but also disappointed to the upside, coming in at 3.8% against expectations of 3.7% and January's 3.9%.

On a monthly basis, the CPI rose 0.4% in February, in line with estimates and up from 0.3% in January. The core CPI rose 0.4%, ahead of expectations for 0.3% and flat from January's 0.4%.

The price of bitcoin {{BTC}} rose a hair to $72,000 in the minutes following the data.

Coming into the year, markets had priced in roughly five or six rates cuts in 2024 to begin as soon as the U.S. Federal Reserve's March meeting (taking place next week). Decent economic growth and inflation figures that remain stubbornly above the Fed's 2% target, however, have slashed those rate cut expectations. Anticipated timing for the first rate cut has now been pushed out to the summer, according to the CME FedWatch Tool.

The hawkish change to the monetary policy outlook so far hasn't been a hinderance to bitcoin. The world's largest crypto has rallied 70% year-to-date to a new record high above $70,000 thanks to massive demand from the spot ETFs.

A check of traditional markets following the faster than expected numbers finds very modest selloffs in U.S. stock index futures and bonds and a slight rally in the dollar. The price of gold is lower by 0.3%, but at $2,180 per ounce remains near a record high.

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.