What to Expect from the March CPI Inflation Report
The upcoming Consumer Price Index statistics for March will be extensively examined by Federal Open Market Committee members before to their next meeting on May 1. The meeting is not likely to result in any changes to interest rates. However, relatively benign inflation numbers may pave the way for a summer interest rate drop, as most FOMC officials and fixed-income markets anticipate.
CPI Data for March 2024
The Bureau of Labor Statistics will release the CPI data for March 2024 on April 10 at 8:30 a.m. According to February’s CPI statistics, yearly inflation is 3.2%, or 3.8% excluding food and energy. This statistic compares to the FOMC’s annual inflation target of 2%.
On April 26, the Bureau of Economic Analysis will issue March’s Personal Consumption Expenditures inflation statistics. PCE inflation is 2.5% annually in February, and 2.8% excluding food and energy. In general, inflation has declined somewhat since its high, but the Fed is worried that it remains meaningfully above policymakers’ 2% target.
Nowcasts of inflation reports
Nowcasts indicate that March inflation will be 0.34% for CPI and closer to 0.25% for PCE. After removing food and energy prices, the equivalent nowcasts are 0.31% and 0.23%, respectively.
The research staff at the Federal Reserve Bank of Cleveland creates these inflation nowcasts by estimating where inflation reports will fall based on current pricing. If these nowcasts are correct, it would reflect some disinflation following January’s high monthly inflation figures. However, this would still result in inflation above the Fed’s 2% annual target. The primary question for the Fed is whether inflation is heading toward its objective or not. There is considerable risk that inflation may remain beyond the Fed’s target, encouraging policymakers to keep interest rates higher for longer.