INFLATION IMPORTANCE

February CPI inflation was a light 0.2% M-o-M and 2.8% Y-o-Y, core was also 0.2% M-o-M but 3.1% Y-o-Y. All readings were better than last month. Fuel price declines helped, as did slowing rents. And Powell’s “super-core” index, which is core minus rents, was a benign 0.2%. Importantly, this decline in inflation is probably a reflection of softening domestic demand. If it keeps up, tariffs aside, rate cuts will materialize.