US inflation steady as Yellen takes lead

Washington - US consumer inflation remained stable in February at a seasonally adjusted 0.1%, the Labour Department said Tuesday, setting the stage for the next round of interest rate decisions this week under the central bank's new leadership.

Overall inflation was 1.1% for the last 12 months, and core inflation, which excludes volatile food and energy prices, was 1.6%. For February, core inflation was also 0.1%.

The news comes as new Federal Reserve chairperson Janet Yellen heads up her first two-day session of the open market committee that will end on Wednesday with the next setting of interest rates. Although the US central bank in January started dialing back its stimulus programme, continued muted inflation and sluggish labour market recovery give the Fed a free hand in maintaining its extraordinarily loose monetary policies.

After buying bonds at a pace of $85bn a month since September 2012, the Fed has begun the long-anticipated "taper" of the so-called quantitative easing, paring the pace to $65bn dollars a month. The bond purchases, even at the new, slower pace, are meant to restrict access to the safe haven of US government debt, forcing investment into the private sector.

The Fed has said it expects to maintain current interest rates - set at an unprecedented near-zero since December 2008 - "for a considerable time" after the bond-buying ends, as long as inflation does not exceed 2.5% and unemployment drops below the 6.5% level.

US unemployment rate rose slightly to 6.7% in February.