While the Consumer Price Index jumped a modest 0.4 percent month over month, the collapse of Silicon Valley Bank and Signature Bank could keep interest rate hikes at bay, economists said Tuesday.

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The measure for consumer inflation showed signs of cooling in February but remained stubbornly high — with housing again singled out as the biggest factor, according to data released Tuesday by the U.S. Bureau of Labor Statistics.

The Consumer Price Index jumped 6 percent yearly and rose 0.4 percent in February. The All Items Index — a measure of goods and services paid for by consumers — logged a 6 percent annual hike and an 0.5 percent monthly uptick, with housing accounting for 70 percent of All Items increases, data shows.

The 6 percent All Items increase was the slowest increase posted in that category since September 2021, signaling that inflation is easing, but still growing significantly faster than the Federal Reserve’s 2 percent target.

“Inflation fell in February, but remains persistently high, driven in part by elevated housing costs and the peculiarity in how housing costs enter into the CPI calculation,” Bright MLS Chief Economist Lisa Sturtevant said. “Year-over-year growth in both rents and owners’ equivalent rents, the measure of housing costs for homeowners, remained higher than the overall figure this past month, despite reports of rents and home prices falling across many markets.”

On a month-over-month basis, February saw the index for shelter rise 0.8 percent, the index for rent rise 0.8 percent, the index for owners equivalent rent increase 0.7 percent, and the index for lodging away from home increase 2.3 percent.

An inflation report like February’s would usually have meant that more interest rate increases were sure to follow, but this week’s failures of Silicon Valley Bank and Signature Bank may change that, Sturtevant noted.

“Before this week’s bank failures and growing risks in the banking sector, the February inflation report would have meant that it was all but certain that the Federal Reserve would continue to raise rates,” she said. “But the recent failures of Silicon Valley Bank and Signature Bank have complicated the picture.”

A slowdown in rate hikes could bring relief to the housing sector, she added.

“A pause in rate hikes and a flight to more secure investments will bring mortgage rates down, which could help prop up a subdued spring housing market,” Sturtevant said.

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