31.03.2017 — US PCE DEFLATOR EXCEEDS FED’S TARGET, BUT PRIVATE CONSUMPTION SOFT

The US PCE deflator rose to 2.1% yr/yr in February, exceeding the Fed’s 2% target for the first time since April 2012, while the core PCE deflator is now up 1.8% yr/yr; the upward drift in inflation suggests continued Fed rate increases are appropriate. US private consumption rose only 0.1% in February and declined by 0.1% in real terms, likely due to transitory factors. Expect a bounce back in March and upcoming months: fundamentals such as improving incomes, solid job growth, buoyant confidence and rising household net worth are positive.

Sandra Hülsmann
Telephone: +49 40 350 60-8357