Federal Reserve Chair Jerome Powell, fresh off winning confirmation for a second term, acknowledged for the first time Thursday that high inflation and economic weakness overseas could thwart his efforts to avoid causing a recession.
The 80-19 vote reflected broad support in Congress for the Fed’s drive to combat surging prices through a series of sharp interest rate hikes that could extend well into next year. The Fed’s goal is to slow borrowing and spending enough to ease the inflation pressures.
The Biden administration says it is canceling three oil and gas lease sales, removing millions of acres from possible drilling as U.S. gas prices reach record highs.
Extreme weather and the war in Ukraine have tightened global supplies of the four most commonly used types of vegetable oil—staple ingredients that are as ubiquitous in home kitchens as they are in restaurants and packaged foods.
Still, Wednesday’s report contained some cautionary signs that inflation may be becoming more entrenched. Excluding the volatile food and energy categories, so-called core prices jumped 0.6% from March to April—twice the 0.3% rise from February to March.
Food banks across America say negative economic conditions are intensifying demand for their support at a time when their labor and distribution costs are climbing and donations are slowing.
The observations came in the Federal Reserve’s semiannual Financial Stability Report that looks at trends in trading and investing as well as broad economic issues.
Fed officials raised interest rates by a half-point last week and Chairman Jerome Powell signaled they would continue at that pace at meetings in June and July to curb inflation.
The 13-member body approved by the Legislature in March is tasked with addressing Indiana’s affordable housing shortage.
With many industries slowed by labor shortages, companies have been jacking up wages to try to attract job applicants and retain their existing employees. Even so, pay raises haven’t kept pace with the spike in consumer prices.
Economists and investors foresee the fastest pace of Federal Reserve rate increases since 1989. The result could be much higher borrowing costs for households well into the future.
The Federal Reserve intensified its fight against the worst inflation in 40 years by raising its benchmark short-term interest rate by a half-percentage point Wednesday—its most aggressive move since 2000—and signaling further large rate hikes to come.
The price hike will test whether carriers can join other industries like food and energy in passing on higher costs. The plan could backfire if disgruntled AT&T customers defect to Verizon and T-Mobile.
Yet, there were signs in Friday’s report from the Commerce Department that inflation might be slowing from its galloping pace and perhaps nearing a peak, at least for now.
The economy’s overall decline in the January-March quarter does not mean a recession is likely in the coming months. Most economists expect a rebound this quarter as solid hiring and wage gains sustain growth.
U.S. consumer confidence dampened slightly in April but remains high even as inflation continues to cloud optimism about the rest of the year.
As the Federal Reserve sees it, the surge in job postings forces employers to boost wages to attract and keep workers. Those higher labor costs are then passed to customers in the form of higher prices, thereby helping fuel inflation.
Soaring prices on everything, particularly at the gas pump, are now making shoppers choosier about how they spend their money.
In a notice sent to sellers Wednesday, the company said its costs had gone up since the beginning of the pandemic due to increases in hourly wages, the hiring of workers and construction of more warehouses.
Even excluding volatile food and energy prices, which have driven overall inflation, so-called core inflation jumped 6.5% over the past 12 months, the biggest such increase since 1982.
