MUFG Research maintains its call for a 25bps rate hike at next week's FOMC March policy meeting.

"The CPI data itself we believe had some good news but also contained reasons for concern. The primary concern and the reason why the FOMC would likely justify a rate hike next week if they do hike is the core service CPI, ex-housing measure, which in MoM terms accelerated from 0.36% to 0.50%, the largest increase since last September," MUFG notes.

"The weakness in core goods continued though with the MoM rate unchanged after a 0.1% increase in January and a -0.1% fall in December. The YoY rate has now fallen from 12.4% to 1.0% in one year, the lowest reading since August 2020. Core goods deflation may well lie ahead in the not too distant future," MUFG adds.