US inflation slows to 6% annual rate amid looming banking crisis

theguardian.com:

Price rises slowed again in February as the annual rate of inflation eased but the report has been overshadowed by a banking crisis ahead of next week’s meeting of the Federal Reserve.

Prices in February were 6% higher than a year ago, down from an annual rate of 6.4% in January and significantly lower than the 9.1% peak of inflation seen in June. Between January and February, prices rose 0.4% as prices increased in sectors like housing and food.

For the Fed, the monthly consumer price index (CPI) – which measures the price of a basket of goods and services – has been the main data point in its decisions to raise interest rates over the last year. Since March of last year, interest rates have gone from zero to 4.5% to 4.75%, the highest level since 2007.

Over the last week, the Fed’s calculations have changed dramatically. The fall of the $200bn Silicon Valley Bank, and the ongoing tumultuous aftermath, has created a formidable obstacle to the dogged fight of the Fed chair, Jerome Powell, dogged fight to bring down inflation by raising rates.

Last week, Powell told Congress that the US still has a “long way to go” in reducing inflation, implying that not only would the Fed continue to increase interest rates in the coming months, but it would do so aggressively. Powell said he was unhappy with January’s small decrease in inflation that was also coupled with data that showed a strong labor market and robust consumer spending.

Just a day later, SVB announced that it needed to raise capital after selling securities at a loss, triggering a textbook-case bank run where the bank’s customers, many who are venture capitalists, started rapidly withdrawing deposits. Financial regulators shut down the bank and took control of its