Headline annual inflation in the Eurozone slowed for the fourth straight month in February, but the core rate jumped unexpectedly to a new high, an unwelcome surprise for European Central Bank rate-setters battling weak economic activity and rampant consumer price growth. 

Preliminary data from the EU statistics office Eurostat showed a decline in inflation last month to 8.5%, a mark above economists’ expectations of 8.3% and just a touch below the 8.6% reading in January.  

But any good news about another slip in the headline measure was overshadowed by the announcement that core rate surged to a record 5.6%, outpacing the previous record of 5.3% set in January, a level also expected this month by analysts. (Continue Reading - LiveSquawk)

Two measures of U.S. inflation are now telling a similar story. But those measures are likely to diverge this year, with one signaling the Federal Reserve’s work is nearly done and the other suggesting the opposite.

That could make it hard for the Federal Reserve to explain to the public why it is holding interest rates high. 

Markets are now betting that inflation, as measured by the 12-month change in the consumer-price index, will fall to about 2.8% by October, from 6.4% in January. Normally, CPI inflation runs a bit higher than inflation measured by the Commerce Department’s personal-consumption expenditures (PCE) price index. If that relationship holds, markets’ CPI forecast implies PCE inflation would drop to around 2.5% by then, said Michael Pond, head inflation research analyst at Barclays PLC.

That would imply the Federal Reserve’s work is nearly done because it prefers the PCE to the CPI index, and uses PCE as the basis for its 2% inflation target. (Continue Reading - Wall Street Journal)

The Bank of Japan is leaning toward monitoring the impact of recent tweaks to its stimulus program rather than making another adjustment at Governor Haruhiko Kuroda’s final policy meeting next week, according to people familiar with the matter.

While BOJ officials continue to see distortion in the shape of Japan’s yield curve, the central bank still needs time to look at the impact of various measures since December that adjust its control of yields, the people said.

The final policy decision will be made only after assessing the latest data and every piece of available information related to policy ahead of the gathering’s conclusion on March 10, they said. (Continue Reading - Bloomberg)