US retailers with lower sales in February
In February, earnings were down 0.4% from January. Economists had expected -0.3%.
The US inflation rate fell to 6% in February from 6.4% in January.
Credit: Wilfredo Lee/AP Photo/Keystone
After a good start to the year, US retail trade suffered losses in February, raising doubts about the Fed’s interest rate hike. The Commerce Department said on Wednesday that revenue fell 0.4 percent from the previous month. Economists polled by Reuters had expected a decline of just 0.3%. In January, there was still a revised 3.2% increase. The chance of a rate stop by the Fed was estimated at 50% after the release of the retail trade data. At the same time, the odds of a quarter percentage point increase are rated high.
The economist at Helaba Ulrich Wortberg explained that “turmoil in the financial markets due to fears of the spread of the banking crisis also leads to lower expectations of interest rates.” NordLB analyst Bernd Krampen sees retailers’ start to the first quarter as a midway success: “These figures do not require a reassessment of US monetary policy: there should be no more negative headlines about difficulties in (US) banks by March 22. The Federal Reserve will announce announced another rate hike of 25 basis points to 5.00%,” according to the expert’s assessment.
The collapse of the California Silicon Valley Bank (SVB) sent shock waves through the markets, which are gradually beginning to subside. Meanwhile, the significant drop in Credit Suisse rates clouded the picture. The stock’s decline raised questions about the further development of the major Swiss bank. In the wake of Credit Suisse, the European banking sector lost 6.8 percent in terms of value. US bank stocks also fell at the open.
The US Federal Reserve has launched a series of interest rate hikes in the fight against rampant inflation. The current range is between 4.5% and 4.75%. Even if the inflation rate falls to 6% in February, the central bank’s target of 2% is still far off. Fed Chairman Jerome Powell recently confirmed that the Fed is guided by incoming data. He expects a likely long and bumpy road before inflation returns to the central bank’s target.
Reuters
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