Consumer Price Index (Feb.)

February's rise in the official core inflation figure, to 2.3% from 2.1%, will possibly elicit talk of higher interest rates to come. Considering the increasing slack in labour markets and moderate labour costs, however, we do not think that this uptick in core inflation points to higher interest rates at all. If we are correct about weaker housing activity ahead, then in a year from now we think interest rates will be lower.