US inflation figures have been released today at 6.04% pa for February 2023, a fall from 6.41% pa in January and 7.87% pa last year. This is still nearly double the US long-term average of 3.28%.
Consumer confidence and higher interest rates meaning larger debt and mortgage payments are squeezing pockets in addition to banking collapses.
The presents a difficult decision for the Federal Reserve with next week’s interest rate decision due on 21/22 March. Do they increase rates and put more pressure on the banking system with no cheap central bank borrowing available as well as pressure on consumers and businesses to meet interest payments as well as squeezing further borrowing for business recovery or do they back off to relief pressure on banks, businesses, and consumers? This is a difficult one. We did expect the last rate increase to be the last and we think the Fed may hold rates next week. This is a tough call either way.