Inflation remains stubbornly high according to the latest Consumer Price Index. February numbers lined up with economists' expectations, but prices are still 6% higher than one year ago and increased slightly from January.
Housing costs accounted for a big chunk of the increase even with energy prices falling.
Two large bank failures over the weekend have complicated the economic picture. Both Silicon Valley Bank and Signature Bank collapsed, forcing federal regulators to make emergency moves to guarantee customers get their money, even those with more than the federally insured amount of $250,000.
"Rising interest rates, was one of the biggest problems that hit them two ways," said B. Riley Wealth Management Chief Market Strategist Art Hogan.
Federal Reserve Chairman Jerome Powell told Congress last week that faster and larger rate hikes could be on the horizon.
"If the totality of the data were to indicate that faster tightening is warranted, we'd be prepared to increase the pace of rate hikes," Powell said to a Senate panel.
The banking collapses and economic news may have slowed that plan for now. Wall Street rallied Tuesday morning after the economic news and a bet on a smaller rate hike. But more bad news came later in the day when the ratings firm Moody's downgraded its outlook to "negative" for the U.S. banking system. It could affect credit ratings and borrowing costs.
"Now the Fed is basically promising to bail out not just these depositors who would have lost their money, but they're basically bailing out future banks as well because they're offering generous loan terms in exchange for banks putting up losing investments as collateral. It's a bailout for depositors, and it's a bailout for banks across the country," said Joel Griffith, a research fellow at The Heritage Foundation.
While President Biden assured Americans about the banking system being safe, he also wants Congress to work on preventing any more banks from folding.
"I'm going to ask Congress and the banking regulators to strengthen the rules for banks, to make it less likely this kind of bank failure would happen again," Biden said Monday.