Bank of America: Fed Still Has Work To Do on Inflation - FJElite

Yesterday’s CPI data was benign, but the read-through to PCE suggests core inflation is likely to come in at 3.1% year-on-year in February. Some of that reflects tariffs, which contributed an estimated 80 basis points to core PCE. There has been better news on housing disinflation over the past year, and the contribution from portfolio management should step down in February due to base effects.

But inflation across the rest of the basket has remained rangebound and is still running above levels consistent with 2% core PCE. The takeaway is that inflation is improving in some areas, but not enough for the Fed to be in a rush to ease rates further.