On Tuesday 13th March 2018, the United States (US) Bureau of Labour Statistics will publish data regarding the US Consumer Price Index (CPI) in February 2018. Economists say that the CPI is one of the most accurate ways to quantify changes in the consumers’ purchasing power and to measure inflation.
The US Federal Reserve’s (Fed) policymakers evaluate inflation changes by monitoring several different prices indexes. The Fed emphasizes the price inflation measure for Personal Consumption Expenditure (PCE), which is produced and published by the US Department of Commerce, because the PCE index covers a wide range of household spending. The Fed also tracks the consumer and producer price indexes issued by the US Department of Labour.
Economists expect that the US inflation rose to 2.2% in February 2018 on an annualized basis. According to data provided by the US Bureau of Labour Statistics, US inflation in January 2018 stood at 2.1%. Analysts also anticipate a 0.1% inflation increase in February 2018, on a month-to-month basis. The Fed’s board set an unofficial, but publicly stated, target for inflation to hover around 2%. Janet Yellen, the ex-Fed chairwoman, told reporters in her first appearance after she left the Fed in February 2018 that central banks should reassess their approach to inflation, but she also expressed her worries that a higher target could unsettle “well anchored inflation expectations.”
US at odds with trade partners
The tension that started between the US and its trade partners around the world on March 1st 2018 is growing, with no sign of a step back from any of the sides. On that day, US President Donald Trump told representatives of the US metals industry that his administration is going to protect it by imposing tariffs on imported metals, more specifically steel and aluminum. President Donald Trump said that the metal industry of his country had struggled in the past due to unfair trade policies implemented by global trade partners and vowed to restore it.
US Treasury Secretary Steven Mnuchin told Bloomberg reporters on March 7th 2018 that “our objective is not to create a trade war. Our objective is to make sure US companies and workers are treated fairly.” Treasury Secretary Steven Mnuchin said that the US should be prepared to face the consequences if it wants to negotiate things that are beneficial for it. During his interview, Steven Mnuchin added that tariffs will definitely be rolled out soon, but he left open the possibility for some countries to be excluded depending on the result of ongoing negotiations.
The Atlanta’s Fed President, Raphael Bostic, said on March 8th 2018 that the proposed trade tariffs would be broadly unhelpful and urged the Fed’s board to take a wait and see the final approach on the issue before it decides its next moves. The President of the Dallas Fed, Robert Steven Kaplan, told media reporters on March 8th 2018 that anything that would damage US relationships with trade partners such as Canada and Mexico would be against the interest of the US. The Dallas Fed President noted that it would be too soon to say which policies should be implemented, taking into consideration the effect of the likely imposed tariffs.
European Union (EU) reacts to US tariffs
The EU’s trade commissioner Cecilia Malmstrom criticized President Donald Trump’s plans on imposing tariffs on imported products. On March 9th 2018, she said that the EU has been in talks with the US regarding the steel sector’s overcapacity for quite some time and that the new US approach is not the right way to deal with it. The EU’s trade commissioner mentioned that Europe and the US are friends and allies, adding that the EU is not a threat to US national security. Cecilia Malmstrom expressed the belief that the EU will finally be excluded from the tariff regime.
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