The consumer price index is still high, though it did ease slightly. Overall CPI climbed 0.4% in February, in line with analyst expectations as it was up 6% from a year earlier, which also met expectations.
DON'T MISS: Trading JPMorgan, Bank of America Amid Fallout in Regional Banks
Last month, CPI rose 0.5% so it is a slight slowdown, but it remains far higher than the Federal Reserve would like. The Fed is aiming for a 2% target.
With this challenging reading and the collapse of Silicon Valley Bank and Signature bank, as well as the pressure that the collapses have put on regional banks, the Federal Reserve is now in a difficult spot ahead of its meeting next week.
Analysts from Goldman Sachs are already expecting the Federal Reserve to hit the pause button on more rate hikes as the economy and the banking system struggle to keep up with the rate hikes.
"We don’t think recent bank failures are a condemnation of the economy, even if the ripple effects weigh on growth. But there’s a part of every crisis that even the smartest analysts can’t account for – the unknown unknowns," Callie Cox, U.S. Investment Analyst at eToro, said.
"The banking system touches many areas of our lives, from our own money to the money of the companies that employ us and the economic stability of our companies. That’s why it can feel so unsettling when the system shows cracks. Markets are preparing for more fallout solely because nobody ultimately knows where this could end up, and we’re seeing that in broad market hedges and a spiking VIX."
She also noted that she doesn't think that the fear of financial instability will "...change Powell’s mind as easily as some think."
