All eyes will be on the Federal Reserve today as they face the monumental challenge of starting to undo their massive economic stimulus at a time when conditions are far from ideal.  Later today the Fed will announce whether they are raising the Fed Funds rate by 25 or 50 basis points.  Markets are expecting a 25 basis point hike so if they raise 50 expect downside volatility.

Retail sales in February rose .3% after rising by 4.9% in January.  Retail sales are a big part of consumer spending and offer clues on the strength of the U.S. economy. Households are still buying plenty of goods and services to keep the economic recovery going, but in most cases consumers are just paying more.  In February, the cost of living rose a sharp 0.8%, according to the consumer price index.

Another surge in energy prices pushed wholesale inflation to it’s biggest one-month jump on record in February.  Final demand prices for goods jumped 2.4% for the month, the largest move ever in data going back to December 2009.  That pushed the headline producer price index up 0.8% on the month, which actually was slightly lower than the 0.9% Dow Jones estimate.  On a year-over-year basis, headline PPI rose 10%, the same as January and tied for the biggest 12-month move ever.