THE FED WILL NOT CLOSE THE DOOR ON MARCH...
Core PCE this week printed at 0.17% MoM with the YoY rate at 2.9%, the first time it has been below 3% since 2021. While the MoM supercore rate ticked up to its highest levels in three months, the Fed’s preferred inflation measure, 6mnth annualised core PCE, now sits below 2 at 1.86%. This is material progress in returning inflation to target and we expect the Fed to keep the door open for a March cut by removing the hawkish bias from the policy statement at the FOMC meeting next week (“In determining the extent of any additional policy firming that may be appropriate to return inflation to 2 percent over time”).
