Since the start of the year, Federal Reserve Chair Jerome Powell and his colleagues had said they were looking for more assurance that inflation was ticking steadily down. Instead, they’ve gotten the opposite.
The March figures, the third straight month of inflation readings well above the Fed’s 2% target, provide concerning evidence that inflation is stuck at an elevated level after having steadily dropped in the second half of 2023.
The unemployment rate fell to 3.8 percent last month, the Bureau of Labor Statistics reported Friday, extending the longest stretch of unemployment below 4 percent in five decades.
Federal Reserve Chair Jerome Powell said the economy’s strength means the Fed isn’t under pressure to cut rates and can wait to see how the inflation numbers come in.
Core prices rose just 2.8% from 12 months earlier in February—the lowest such figure in nearly three years—down from 2.9% in January.
The financial markets cheered the message Wednesday from Jerome Powell and the Federal Reserve, with traders sending the Dow Jones industrial average surging 1%, to another all-time high.
A key question for Federal Reserve Chair Jerome Powell and the 18 other officials on the Fed’s interest-rate-setting committee is how—or whether—recent inflation figures have altered their timetable for cutting rates.
Consumer prices in the United States picked up last month as inflation remains a persistent challenge for the Federal Reserve and for President Joe Biden’s reelection campaign, both of which are counting on a steady easing of price pressures this year.
Though inflationary pressures have significantly eased, average prices remain about 17% above where they stood three years ago.
In his remarks to Congress on Wednesday, Federal Reserve Chair Jerome Powell offered no hints on the potential timing of rate cuts.
January’s month-to-month price increase will likely underscore the concern expressed recently by Federal Reserve officials about the risk of cutting interest rates too soon this year.
In minutes from the Jan. 30-31 meeting released Wednesday, most Fed officials said they were worried about moving too fast to cut their benchmark interest rate before it was clear that inflation was sustainably returning to their 2% target.
The prices of services—hotel rooms, restaurant meals, auto insurance, apartment rents and the like—are still rising faster than they did before the pandemic and keeping overall inflation persistently high.
Wages rose unexpectedly fast in January, too. The strong hiring and wage growth could complicate or delay the Federal Reserve’s intention to start cutting interest rates later this year.
The Federal Reserve indicated Wednesday that it’s nearing a long-awaited shift toward cutting interest rates, a sign that its officials have grown confident that they’re close to fully taming inflation.
Pay and benefits for America’s workers grew in the final three months of last year at the slowest pace in two and a half years, a trend that could affect the Federal Reserve’s decision about when to begin cutting interest rates.
With inflation having dropped sharply after an extended period of gloomy consumer sentiment, Americans are starting to show signs of feeling better about the economy.
The Labor Department reported Friday that its producer price index—which tracks inflation before it reaches consumers—declined 0.1% from November to December after falling 0.1% in November and 0.4% in October.
However, excluding volatile food and energy costs, so-called core prices rose just 0.3% month over month, unchanged from November’s increase.
Inflation is steadily moving down to the Fed’s year-over-year target of 2% and appears to be clearing the way for Fed rate cuts in 2024. That, in turn, could translate into lower rates on everything from mortgages to credit cards.
