A new report showing inflation at the wholesale level fell for the 4th month in a row, could potentially cause a delay in Fed plans for a rate hike. Bobbi Rebell reports.
A surprisingly tame inflation report could put a wrench in what the markets expect will be a rate hike by the Fed in June. U.S. producer prices fell in February for the 4th straight month- down half a percent. The key issue: the services sector. Gasoline stations in particular getting squeezed- not surprising given falling oil prices. The Fed, which has a 2 percent inflation target, has kept its key short-term interest rate near zero since December 2008. A separate report showed consumer sentiment down in early March because of bad weather. That should be enough for the Fed to think twice before making a rate hike move says Fact and Opinion Economics' Bob Brusca: SOUNDBITE: BOB BRUSCA, CHIEF ECONOMIST, FACT AND OPINION ECONOMICS (ENGLISH) SAYING: ""Oil prices are unraveling and the dollar is rising. I don't know what they are certain of, I just think they've been smoking something at the board of governors." In fact, worries about oil and the strong dollar weighed on Friday's stock markets, as concerns rise about the impact on earnings of U.S. multinational companies. SOUNDBITE: BOB BRUSCA, CHIEF ECONOMIST, FACT AND OPINION ECONOMICS (ENGLISH) SAYING: "I think they should be concerned about the outlook. I think the economy isn't performing well. I think it is doing some backtracking. I think you've got to have more concern about how economic performance is turning out. We haven't had a stock market selloff in a while and it makes some sense that stocks are backing off and I really firmly believe that this weak oil sector is doing damage to the U.S. economy." The Fed will be under pressure when it meets next week to clarify the timing of a rate hike.