Although headline CPI inflation has declined to –0,1 percentage points and Personal Consumption Expenditure inflation stands at 0,2 percentage points (year-on-year), it is likely that monetary policymakers will look through the oil price shock. Core Personal Consumption Expenditure inflation is at 1,3 per cent and services inflation is at 2,1 per cent, very close to the US Fed’s 2 per cent goal.
Wage growth ticked up to 2,2 per cent in January. It is anticipated that the Federal Open Market Committee will commence with the process of interest-rate normalisation during the course of this year, despite its use of the term “patient” during its January statement, and market participants are eagerly anticipating the March statement to analyse it for any change in the language used.