This week combined the release of the minutes of the Fed’s Federal Open Markets Committee (FOMC) from early February with the release of the Fed’s preferred inflation number, the Personal Consumption Expenditures price measure. The PCE climbed 5.4 percent in January, basically the same as the gain of 5.3 percent the prior month. The January inflation numbers, combined with the release earlier in the week of the minutes from the FOMC meeting on 1/31-2/1, point towards another increase in rates when the FOMC meets next month on March 20/21.

Chair Powell has done a good job of telegraphing policy and not surprising markets, and both his remarks and the February minutes point towards another increase.  The minutes included the interesting statement that while the 25bps increase was unanimous during the meeting, some of the Committee members suggested they could support a 50bps increase.

Before the next FOMC meeting in late March, the data for inflation and employment for February will be released.  The Fed Chair has made it clear that their decisions are data driven; but as of today it appears all the tea leaves point to another 25bps increase in March.

Debt ceiling

There were no public statements on debt ceiling talks this past week, as members of the Hous...

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