NEW YORK (Reuters) - Consumer prices rose modestly in March as falling electricity costs countered higher gasoline prices, boosting the view the U.S. Federal Reserve has room to provide more support for the economy if needed.
MILLAN MULRAINE, SENIOR MACRO STRATEGIST, TD SECURITIES, NEW YORK
"Energy prices continue to be a factor for consumer prices more generally and that is reflected in the wedge that we continue to see between core inflation and headline inflation. Over time we do think that headline inflation will continue to fall back to levels that are more consistent with the Fed monetary policy stance. We see it falling back to 2 percent by year-end as the impact of energy prices dissipates."
LINDSEY PIEGZA, ECONOMIST, FTN FINANCIAL, NEW YORK
"What we see is energy prices are seeping into the economy as producers try to pass on their costs. This is putting pressure on consumers. Consumers are increasingly sensitive to price increases given the sluggish rise in income. What this means going forward is a decline to retail sales. That's the biggest concern."
"This along with yesterday's report on the PPI put the Fed on the defensive for further policy accommodation. You have slowing job growth and rising prices. This would put them further on hold. There is no momentum one way or the other for them to ease more."
BORIS SCHLOSSBERG, HEAD OF RESEARCH, GFT FOREX, JERSEY CITY
"I think the Fed has made it blatantly clear that inflation is not their first concern. They're more interested in growth and robust labor numbers, so they'll always give the benefit of the doubt to inflation numbers unless they creep up above 3 percent or higher. While the CPI numbers are muted because they take out food and energy, the real inflation rate most Americans are feeling is far greater than what these statistics are showing. This could hem the Fed in as far as more QE. I think they will be hard-pressed to do more QE before the election. But philosophically, the Fed is more inclined toward easing."
JOSEPH TREVISANI, CHIEF MARKET STRATEGIST, WORLDWIDE MARKETS, WOODCLIFF LAKE, NEW JERSEY
"The as-expected inflation numbers will not push the markets in any particular direction. The underlying problem of inflation outstripping wage gains remains. That is the danger for the economy in the long run."
VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS
"The CPI rose by 0.3% in March as the indexes for food, energy, and nearly all core items increased over the month. Core prices were up 0.2%. Both figures match market expectations. While the headline's growth inched down from February (0.4%), core CPI skipped up from the month prior (had been 0.1%). Consumer prices have risen 2.7% in the past 12 months. This is a deceleration from February's annual growth of 2.9%. Core prices' yr/yr rate on the other hand increased between months, with March's core CPI up 2.3% yr/yr, slightly higher than February's pace of 2.2%."
STOCKS: U.S. stock index futures hold steady at lower levels.
BONDS: U.S. Treasury debt prices hold steady at higher levels.
FOREX: Dollar pares gains slightly versus the euro.
(Americas Economics and Markets Desk; +1-646 223-6300)