Using the Cleveland Fed nowcast for February, y/y inflation will be 3%, instantaneous at 3.2%, 3.6% instantaneous using Goldman Sachs estimate based on today’s PPI release.

Figure 1: Instantaneous inflation (T=12,a=4) for core PCE deflator, using Cleveland Fed nowcast (dark blue), using Goldman Sachs estimate of 2/27 (lsky blue)all in decimal form %.. Calculations per Eeckhout (2023).Source: BEA, Cleveland Fed, Goldman Sachs, and author’s calculations.

Instantaneous above y/y indicates the most recent months’ m/m inflation is higher than the distant past.

Unless unemployment rises quickly, it’s difficult to see an imminent rate decrease.