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US Inflation Data in Focus Amid Tariff and Growth Concerns

US Inflation Data in Focus Amid Tariff and Growth Concerns

Financial markets are bracing for Wednesday’s U.S. inflation data for February, as President Trump’s tariff policies and geopolitical tensions remain in the spotlight. The Federal Reserve has recently expressed concerns that inflation is not slowing as expected, with potential cost pressures emerging from trade policies.

Economists at ING noted that business surveys suggest companies are preemptively raising prices in response to looming tariffs. Additionally, rising food and energy prices could further contribute to inflationary pressures. However, despite these risks, the impact on U.S. interest rate expectations may be muted as markets shift their focus toward growth concerns.

The latest data indicates that investors now expect three rate cuts from the Fed this year, up from just one a few weeks ago. ING analysts believe that even if inflation prints 0.3% month-over-month, it is unlikely to alter market sentiment, as concerns over government austerity and consumer spending power weigh on economic outlooks.

In addition to inflation data, Friday’s University of Michigan consumer sentiment report could provide further insights into the public’s confidence amid tariff-related uncertainty and government job losses. Other key economic releases this week include producer price index (PPI) data and weekly jobless claims figures on Thursday.

On the trade front, the U.S. is set to impose 25% tariffs on steel and aluminum imports from the EU starting Wednesday, adding to global trade tensions. Meanwhile, the Treasury Department is scheduled to auction $58 billion in three-year notes on Tuesday, $39 billion in 10-year notes on Wednesday, and $22 billion in 30-year bonds on Thursday, potentially influencing market liquidity and interest rate expectations.

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