UBS: Lag Effect Suggests Tonight's Inflation Should Be Moderate

Odaily News UBS Group Chief Economist Paul Donovan pointed out that the U.S. Consumer Price Index data for February, while predating recent market turmoil, remains crucial for the Federal Reserve's policy formulation. He expects that the underlying inflationary pressures reflected in today's data should be moderate and believes the Fed should only respond to broad-based price increases. Donovan emphasized that the Fed lacks policy tools to address isolated market disruptions. He also noted that the nearly 27% increase in gasoline prices from the January low will not be reflected in today's data, but consumers will notice the surge in prices for some grocery items. (Jin10)