Inflation rose again in February, keeping the Federal Reserve on course to wait at least until the summer before starting to lower interest rates.

The consumer price index, a broad measure of goods and services costs, increased 0.4% for the month and 3.2% from a year ago, the Labor Department’s Bureau of Labor Statistics reported Tuesday. The monthly gain was in line with expectations, but the annual rate was slightly ahead of the 3.1% forecast from the Dow Jones consensus.

Excluding volatile food and energy prices, the core CPI rose 0.4% on the month and was up 3.8% on the year. Both were one-tenth of a percentage point higher than forecast.

While the 12-month pace is off the inflation peak in mid-2022, it remains well above the Fed’s 2% goal as the central bank approaches its two-day policy meeting in a week.

A 2.3% increase in energy costs helped boost the headline inflation number. Food costs were flat on the month, while shelter rose another 0.4%.

The BLS reported that the increases in energy and shelter amounted to more than 60% of the total gain. Gasoline jumped 3.8% on the month while owners’ equivalent rent, a hypothetical gauge of what homeowners could get renting their properties, rose 0.4%.

“Inflation continues to churn above 3%, and once again shelter costs were the main villain. With home prices expected to rise this year and rents falling only slowly, the long-awaited fall in shelter prices isn’t coming to the rescue any time soon,” said Robert Frick, corporate economist at Navy Federal Credit Union. “Reports like January’s and February’s aren’t going to prompt the Fed to lower rates quickly.”

Airline fares posted a 3.6% increase, apparel prices rose 0.6% and used vehicles were up 0.5%. Medical care services, which helped feed a higher-than-expected CPI increase in January, decreased 0.1% last month.

The year-over-year increase for headline CPI was 0.1 percentage point higher than January, while core was one-tenth of a point lower.

Markets showed little initial reaction after the news broke, with futures tied to major stock averages as well as Treasury yields slightly higher.

While the 12-month pace is off the inflation peak in mid-2022, it remains well above the Fed’s 2% goal as the central bank approaches its two-day policy meeting in a week.

Fed officials in recent weeks both have signaled that rate cuts are likely at some point this year and expressed caution about letting up too soon in the battle against high prices. The statement after the January meeting indicated that policymakers need “greater confidence” that inflation is moving back to target.

Chair Jerome Powell, in congressional testimony last week, echoed those concerns, though he did mention that the Fed is probably “not far” from the point where it can start easing up on monetary policy.

Tuesday’s report “leaves Fed officials some way from attaining the ‘greater confidence’ needed to begin cutting interest rates,” said Paul Ashworth, chief North America economist at Capital Economics.

For financial markets, the shift in the Fed stance from its apparent policy pivot in late 2023 has meant a repricing on the pace of rate cuts. Where futures traders entered the year expecting cuts to start coming in March, with six or seven total on the year, they have pushed out the first reduction to June, with three to follow, assuming cuts in quarter percentage point increments.

A bustling economy has helped the Fed focus on incoming data and allowed policymakers to avoid having to rush to lower rates. Gross domestic product expanded at a 2.5% annualized pace in 2023 and is on pace to increase at a 2.5% pace in the first quarter of 2024, according to the Atlanta Fed’s GDPNow tracker.

One key ingredient in that growth has been a resilient consumer boosted by a strong labor market. The economy added another 275,000 nonfarm jobs in February, though the increase skewed heavily to part-time jobs and the unemployment rate rose to 3.9%.

Such strength can be a double-edged sword: While the growth in the face of aggressive rate hikes has bought the Fed time on policy, it also raises concerns that inflation could be more durable than expected.

Housing costs in particular have caused concern.

Shelter comprises about one-third of the CPI weighting and has been slow to decelerate, at least according to the BLS measure. Fed officials see rental prices coming down through the year, and other measures outside the CPI computation of owners-equivalent rent have shown easing price pressures.

Correction: The BLS reported that the increases in energy and shelter amounted to more than 60% of the total gain. An earlier version misstated a sector.

There’s a corner of the market gaining traction among ETF investors, according to The ETF Store’s Nate Geraci.

The firm’s president finds international ETFs are experiencing stronger inflows.

“There is a little bit of performance chasing going on here, because broad international stocks have fairly significantly outperformed U.S. stocks since about the beginning of the fourth quarter of last year,” he told CNBC’s “ETF Edge” this week. “Investors are looking at that performance and perhaps reallocating there.”

BofA Global Research’s latest market data out late this week appears to support Geraci’s thesis. It shows emerging markets are seeing strong inflows so far this year.

According to the firm, inflows into emerging-market equities are clipping along at $152.3 billion on an annualized basis. This would mark the group’s largest ever inflows if the pace continues.

Geraci believes a weakening U.S. dollar due to a potential pivot away from interest rate hikes by the Federal Reserve is partially responsible for the shift. The U.S. Dollar Currency Index is down almost 1% year to date.

Valuations of overseas companies may also be more attracting investors, he added.

And, there may be even more growth ahead.

D.J. Tierney of Schwab Asset Management contends retail investors don’t own enough global stocks. He suggests the upside will continue into the second quarter, which starts Monday.

“Rebalancing [to international stocks] to get some more exposure could make sense for a lot of investors,” said the senior investment portfolio strategist.

His firm’s Schwab International Equity ETF, which tracks large- and mid-cap companies in over 20 developed global markets, is up 8.1% so far this year.

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Investor fears subside. Is it premature?

In the event of a bank rescue in the European Union, the EU will start by “absorbing equity stack, and then the AT1 and then the Tier 2 and then the rest,” Dominique Laboureix, chair of the EU’s Single Resolution Board, told CNBC in an exclusive interview.

Fears are subsiding and markets are rebounding. But it’d be too premature to celebrate — at least not until we find out how the economy’s doing from reports coming out soon.

Yesterday, all major indexes rose. The S&P 500 climbed 0.57%, the Dow Jones Industrial Average advanced 0.43% and the Nasdaq Composite added 0.73%. Investors continued flocking to technology stocks: Amazon rose 1.75%, Microsoft gained 1.26% and Netflix climbed 1.93%. “The Silicon Valley Bank fiasco was just the oxygen the tech bull needed to snap out of its funk and get back to work,” CNBC’s Jim Cramer said.

How do we know investors are regaining confidence, other than inferring their sentiment from market moves? We look at the CBOE Volatility Index. Derived from the price of S&P 500 options, the volatility index measures the market’s expectations of how the S&P will move over the next 30 days. Hence, it serves as a proxy of investors’ fears. Currently, it’s around levels last seen at the start of March, before SVB collapsed.

In other words, markets seem to be pricing in the best of both words: “a recession that allows rates to be low and brings inflation down sharply, yet one that does not have a massively negative effect on corporate earnings,” Ajay Rajadhyaksha, global chairman of research at Barclays, wrote in a Thursday note.

That might be premature, as Rajadhyaksha suggests. Yesterday’s jobless claims number, while reporting an increase, is still below what the Federal Reserve would like to see for the labor market to slow substantially. We’ll get more granular data on the economy with the release of the Personal Consumption Expenditures Price Index later today, and the March jobs report next week.

For now, though, it’s undeniably nice to have a respite from the banking crisis.

— CNBC’s Dan Mangan contributed to this report.

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CNBC’s Jim Cramer on Thursday said the Federal Reserve no longer needs action to tame inflation — and it’s because of the banking crisis.

Cramer said 10 days ago that investors were expecting a possible 50-basis-point interest rate hike from the Fed based on Chairman Jerome Powell’s recent response to January inflation data and the strong labor market.

Powell warned that if inflation remained strong, he expected rates to go “higher than previously anticipated” and possibly faster than a quarter point at a time.

It seemed like a 50 basis point rate hike was coming until the collapse of Silicon Valley Bank, Cramer said.

Federal Reserve Chairman Jerome Powell on Tuesday cautioned that interest rates are likely to head higher than central bank policymakers had expected.

Citing data earlier this year showing that inflation has reversed the deceleration it showed in late 2022, the central bank leader warned of tighter monetary policy ahead to slow a growing economy.

“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell said in remarks prepared for two appearances this week on Capitol Hill. “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”

Those remarks carry two implications: One, that the peak, or terminal, level of the federal funds rate is likely to be higher than the previous indication from the Fed officials, and, two, that the switch last month to a smaller quarter-percentage point increase could be short-lived if inflation data continues to run hot.

In their December estimate, officials pegged the terminal rate at 5.1%. Current market pricing moved higher following Powell’s remarks, to a range of 5.5%-5.75%, according to CME Group data. Powell did not specify how high he thinks rates ultimately will go.

The speech comes with markets generally optimistic that the central bank can tame inflation without running the economy into a ditch.

Stocks fell sharply while Treasury yields jumped after Powell’s remarks were released. Market pricing also titled sharply to a strong possibility of a 0.5 percentage point interest rate hike when the Federal Open Market Committee meetings March 21-22.

January data shows that inflation as gauged by personal consumption expenditures prices — the preferred metric for policymakers — was still running at a 5.4% pace annually. That’s well above the Fed’s 2% long-run target and a shade past the December level.

Powell said the current trend shows that the Fed’s inflation-fighting job is not over, though he noted that some of the hot January inflation data could be the product of unseasonably warm weather.

“We have covered a lot of ground, and the full effects of our tightening so far are yet to be felt. Even so, we have more work to do,” he said, adding that the road there could be “bumpy.”

Powell speaks Tuesday before the Senate Banking, Housing and Urban Affairs Committee then will address the House Financial Services Committee on Wednesday.

The chairman faced some pushback from Democrats on the Senate panel who blamed inflation on corporate greed and price gouging and said the Fed should reconsider its rate hikes. Sen. Elizabeth Warren, D-Mass., a frequent Powell critic, charged that the Fed’s inflation goals will put 2 million people out of work.

“We’re taking the only measures we have to bring inflation down,” Powell said. “Will working people be better off if we just walk away from our jobs if inflation remains at 5, 6%?”

The Fed has raised its benchmark fund rate eight times over the past year to its current targeted level between 4.5%-4.75%. On its face, the funds rate sets what banks charge each other for overnight lending. But it feeds through to a multitude of other consumer debt products such as mortgages, auto loans and credit cards.

In recent days, some officials, such as Atlanta Fed President Raphael Bostic, have indicated that they see the rate hikes coming to a close soon. However, others, including Governor Christopher Waller, have expressed concern about the recent inflation data and say tight policy is likely to stay in place.

“Restoring price stability will likely require that we maintain a restrictive stance of monetary policy for some time,” Powell said. “The historical record cautions strongly against prematurely loosening policy. We will stay the course until the job is done.”

Powell noted some progress on inflation for areas such as housing.

However, he also noted “there is little sign of disinflation” when it comes to the important category of services spending excluding housing, food and energy. That is an important qualifier considering that the chairman at his post-meeting news conference in early February said the disinflationary process had begun in the economy, remarks that helped send stocks higher.

Markets mostly had expected the Fed to enact a second consecutive quarter-point, or 25 basis points, rate increase at the Federal Open Market Committee meeting later this month. However, as Powell spoke markets priced in a 69% probability of a higher half-point increase at the March meeting, according to CME Group data.

Powell reiterated that rate decisions will be made “meeting by meeting” and will be dependent on data and their impact on inflation and economic activity, rather than a preset course.

Lower gas prices are raising optimism that inflation is on the decline, according to a survey Monday from the New York Federal Reserve.

Respondents to the central bank’s August Survey of Consumer Expectations indicated they expect the annual inflation rate to be 5.7% a year from now. That’s a decline from 6.2% in July and the lowest level since October 2021.

Three-year inflation expectations dropped to 2.8% in August from 3.2% the previous month. That was tied for the lowest level for that measure since November 2020.

The lowered outlook came amid a tumble in gasoline prices from more than $5 a gallon earlier in the summer, a nominal record high. The current national average is about $3.71 a gallon, still well above the price from a year ago, but about a 26-cent decline from the same point in August, according to AAA.

Along those lines, consumers now expect gas prices to be little changed a year from now, according to the Fed survey. Food prices are expected to continue to climb, but the 5.8% anticipated increase a year from now is 0.8 percentage point lower than it was in July.

Rents are projected to increase 9.6%, but that is a 0.3 percentage point drop from the July survey.

Those numbers come as the Fed is using a series of aggressive interest rate hikes to battle inflation that is still running close to a more than 40-year high. The central bank is widely expected to approve a third consecutive 0.75 percentage point increase when it meets again next week.

While consumers expect inflation pressures to ease somewhat, they still think the cost of living will escalate.

Median expectations for household spending over the next year rose 1 percentage point to 7.8% in August, an increase in outlook driven largely by those holding a high school education or less and a group largely composed of lower earners.

Moreover, respondents said credit is harder to come by now. Those reporting that it’s more difficult now to get credit rose to a series high, with 57.8% saying that it’s either harder or much harder, the New York Fed reported.

Also, those expecting to miss a minimum debt payment over the next three months rose 12.2%, a 1.4 percentage point gain that was the highest reading since May 2020.

The Bureau of Labor Statistics on Tuesday will release the August consumer price index reading. Economists surveyed by Dow Jones expect CPI to have risen 8% from a year ago, though they see a decline of 0.1% from July. Excluding food and energy, core CPI is projected to rise 6% year over year and 0.3% month over month.