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Inflation Ease to 6% in February, but Fed Still in Tough Spot

US Inflation increased to 6% in February, which is quite good news. But the information about easing inflation doesn't relax the US central bank. The Fed is still in a tough spot, mainly because the financial system needs to be stable.

The US government said on Tuesday that the price of the US Dollar continues to increase compared to other major currencies. However, currency movements also cannot keep pace with inflation moving into the accessible zone.

The US Dollar is still in a delicate moment for the US financial system.The core measure of underlying inflation pressure indicates that currency movements must align with what the Fed wants.

However, many economists say that the central bank could suspend its year-long stretch of interest rate hikes. The Federal Reserve Chair, Jerome Powell, also suggested that the Fed will raise the key rate again if inflation doesn't cool down.

This will also impact the movement of mortgage rates, auto loans, credit cards and business loans. But the Fed believes that this is the best move.


Inflation Declines to 6% in February, the Slowest Since September 2021

Inflation has been easing for eight months, and in February, it was shown that consumer prices rose 6% from 12 months earlier. With this eased increase in consumer prices, the Federal Reserve is still in a dangerous zone, so it must pose a challenge.

Prices in the economy's sprawling service sector also show good movement. The economic sector has continued to accelerate since last month. However, some economists still hope that the Fed will raise its key rate, which will impact consumers and business loans.

Even though inflation showed signs of cooling off in January, it is still relatively high. Especially if you look at the Federal Reserve's target of 2%, then this 6% figure still needs to be revised. These measures and expectations describe a mark that has a reasonably strong base.

Nevertheless, the latest concern is investors who place a better than 50% chance of the Fed raising rate. This indicates that interest rates will be set higher than previously predicted.

All of this is done with the aim of financial stability. "The February consumer price index didn't change enough for us to call for a 25 bps rate hike in the next FOMC meeting," said Ryan Sweet, chief US economist at Oxford economics.

He also continued about the severe stress that spiked in the banking system while taming inflation. This 6% increase also creates a dilemma for the Federal Reserve as it copes with high inflation.

The report also relates to predictions from the latest Consumer Price Index, and the target of various parties and economists are easing the economy.

The Rupiah is Overshadowed by the Bankruptcy of the US Bank and the Increase in FED Interest Rates

Nevertheless, the challenges that must be faced are still relatively high. The Fed's interest rate increase and the latest news regarding the bankruptcy of the US Bank, Silicon Valley Bank, continue to threaten many of the world's major currencies, including the Rupiah.

The rupiah exchange rate against the US dollar continued to decline in line with market expectations of a delay in the increase in the US Central Bank's benchmark interest rate.
The Rupiah opened down 28 points or around 0.19 per cent to 15,405 positions. However, until the market closing, the Rupiah closed at Rp. 15,385. This means that until the market closing, the Rupiah exchange rate closed 8 points or 0.06 per cent.

This price decline also did not only occur in the Rupiah because most Asian currencies also fell. However, Bank Indonesia will continue to take steps to resolve this issue.

US inflation in February closed lower at 6%. However, this is far above the US central bank's target of 2% inflation. With all this uncertainty, it is also what makes the Rupiah, and the majority of Asian currencies must experience weakening.



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