The US Consumer Price Index (CPI) data for February was released at 20:30 Beijing Time on March 11. The core view is that while the February CPI figures were entirely in line with market expectations, given the recent oil price shocks, this may only represent a calm before the storm, with market focus shifting to March data. Following the release, US stocks, US Treasury bonds, and gold declined, while the US dollar strengthened. Market expectations for interest rate cuts in 2026 have now fallen to around just one cut. Overall, caution is warranted regarding market pressures stemming from rising US inflation, with short-term attention needed on changes in the average oil price level and the duration of elevated oil prices.

1. US February CPI increased by 2.4% year-on-year, matching expectations and the previous reading. Core CPI rose 2.5% year-on-year, also aligning with forecasts and the prior figure. Super core CPI climbed 2.75% year-on-year, exceeding the previous value. Month-on-month, CPI increased by 0.3%, meeting expectations and rising from the prior 0.2%. Core CPI grew 0.2% month-on-month, matching forecasts but slowing from the previous 0.3%. Super core CPI advanced 0.35% month-on-month, lower than the prior reading. Overall, the February CPI data is considered outdated, as it predates the recent oil price surge, and was uneventful, fully meeting expectations. Although the core CPI year-on-year rate has fallen to its lowest since September 2022, the super core CPI, while moderating monthly, saw its annual rate rebound, indicating persistent inflationary stickiness remains.

2. Following the CPI release, US stocks, US Treasury bonds, and gold fell, while the US dollar alone appreciated, reflecting a cooling in interest rate cut expectations. The probability of a rate cut by July implied by interest rate futures is now below 50%, and below 80% for September. The total number of rate cuts expected for all of 2026 has decreased to 1.09. Although the February CPI perfectly matched expectations, the dollar's strength and the pullback in rate cut expectations reflect market concerns about the future inflation path. The current primary risk is not inflation inertia but rather exogenous shocks driven by oil prices.

3. Outlook for Inflation: 1) Core Inflation: Inflationary stickiness in the US persists. The path of core goods inflation depends on tariffs and geopolitical disruptions; housing inflation may continue to cool; super core inflation remains key to overall stickiness. 2) Energy Inflation: According to calculations, a 10% rise in oil prices could push energy CPI up by approximately 2.4%. Given the current weight of energy inflation at 6.3%, this would contribute about 0.15 percentage points to the headline CPI. Factoring in longer-term and broader "second-round effects," the total impact on inflation could reach 0.3 percentage points. However, facing the challenge of the midterm elections, the administration is expected to attempt to stabilize international oil prices. Simultaneously, the threshold for oil prices to become a key variable in Federal Reserve decision-making is high; focus should be on the trend in the average oil price and how long high prices persist.

4. Outlook for Interest Rate Cuts: As detailed in the thematic report "Panoramic Scan: US Economy, Policy, and Strategic Dynamics," the Federal Reserve currently faces a dilemma with its dual mandate (weaker employment versus still-strong inflation plus rising average oil prices). The Fed is likely to maintain a wait-and-see stance during its policy meetings in the first half of the year. Looking ahead, a genuine shift in policy space will most likely occur after the Federal Reserve Chair transition in May. Only after the leadership handover, and if the new Chair's policy stance shows marginal adjustments alongside a gradual economic slowdown in the first half of the year, might the space for rate cuts open more significantly in the second half. Beyond the rate cut path, US dollar liquidity is also a key focus, as non-bank sectors and the offshore dollar system could still face periodic liquidity risks in 2026.

Risk warnings include a sharper-than-expected weakening of US economic momentum, less monetary policy easing from the Fed than anticipated, and an escalation of global geopolitical and trade frictions beyond expectations.