Bank of America Says Fed Should Not Rush to Cut Rates as Core Inflation Remains Elevated

LootboxPhobia · 2026-03-12T13:25:34+00:00

Bank of America analysts point out that following the latest consumer price index data release, the Federal Reserve still needs to work on inflation and should not rush to cut rates. Despite moderate CPI performance, core PCE year-over-year is expected to reach 3.1% in February, primarily driven by tariff effects. While moderating housing inflation is a favorable factor, other categories remain above target levels.

LootboxPhobia

2026-03-12 13:25:34

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Investing.com – U.S. bank analysts say that after the consumer price index data is released on Wednesday, the Federal Reserve still has work to do on inflation and should not rush to further ease interest rates.

Although Wednesday’s CPI data was moderate, based on the interpretation of personal consumption expenditure inflation, U.S. banks believe that the core PCE year-over-year could reach 3.1% in February.

Part of this is due to tariff factors, with U.S. banks estimating that tariffs contribute about 80 basis points to core PCE.

Meanwhile, there is good news that housing inflation has slowed over the past year. Due to base effects, housing’s contribution to portfolio management is expected to decrease in February.

However, U.S. banks state that inflation in other categories has been fluctuating within a range and remains above the level consistent with a 2% core PCE.

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