Jones Lang LaSalle

CPI, Housing Starts Data Are Bullish
By TSC Staff
3/16/2006 8:58 AM EST

Consumer-level inflation was tame last month, the government said Thursday, adding a dovish note to the interest rate debate.

The consumer price index rose 0.1% in February, after jumping 0.7% a month earlier. Excluding food and energy, the so-called "core" CPI was also up 0.1%, according to the Commerce Department.

Economists had been expecting readings of up 0.1% on the headline number and up 0.2% on the core.

Contributing to the benign reading was a 1.2% decline in energy prices and a 0.1% rise in both vehicle costs and housing.

Thursday's number bolsters the view of observers who expect the Federal Reserve to stop laying on interest rate hikes after one or two more meetings of the Federal Open Market Committee. The official fed funds lever currently stands at 4.5% after 14 consecutive quarter-point tightenings.

A separate report released Thursday showed housing starts occurred at an annualized rate of 2.12 million in February, down 7.9% from a revised January number. Economists had expected a rate of 2 million starts in February. Building permits fell 3.2% to 2.145 million, also slightly better than expected.

Stock futures turned around after the reports, with the S&P 500 going from 2 points below fair value to 3 points above.