The recent pickup in inflation has led some economists to postpone their projections for when the Federal Reserve will begin cutting interest rates.
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The latest figures point to a strong but slowing economy that has been tempered by the Federal Reserve’s aggressive efforts to control inflation.
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Builders in the nine-county Indianapolis area filed only 457 single-family building permits in October, down a whopping 46% from 845 in the same month of 2021.
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Even if inflation continued declining to the Fed’s 2% target, officials said, “it would likely be appropriate to move gradually” in lowering rates, according to minutes of the November 6-7 meeting.
After Powell’s cautious remarks Thursday, traders estimated the likelihood of a Federal Reserve rate cut in December at just below 59%, down from 83% a day earlier.
The rate cut signals that Fed officials are paying more attention to warnings in the economy, including the slowing job market.
The Fed’s move to start cutting rates has not sent mortgage costs down. Instead, the 30-year fixed-rate mortgage has ticked up for the last five weeks.
The ongoing decline in inflation makes it even more likely that the Federal Reserve will cut its key benchmark rate further in the coming months.
The rate cut, the Fed’s first in more than four years, reflects its new focus on bolstering the job market, which has shown clear signs of slowing.
At issue is how fast the Fed wants to lower interest rates to a point where they’re no longer acting as a brake on the economy—nor as an accelerant. Where that so-called “neutral” level falls isn’t clear.
The so-called core consumer price index, which excludes food and energy costs, increased 0.3% from July and 3.2% from a year ago, Bureau of Labor Statistics figures showed Wednesday.
Collectively, Friday’s figures depict a job market slowing under the pressure of high interest rates but still growing.
The Commerce Department had previously estimated that the nation’s gross domestic product—the total output of goods and services—expanded at a 2.8% rate from April through June.
Federal Reserve Chair Jerome Powell emphasized that inflation, after the worst price spike in four decades inflicted pain on millions of households, appears largely under control.
Further guidance on the Fed’s next steps is expected when Chair Jerome Powell gives a highly anticipated speech Friday morning at the annual symposium of central bankers in Jackson Hole, Wyoming.
For nearly a year, cooling inflation has provided gradual relief to America’s consumers, who were stung by the price surges that erupted three years ago, particularly for food, gas, rent and other necessities.
Friday’s report from the Labor Department showed that employers added 35% fewer jobs than forecasters had expected and the unemployment rate hit its highest level since October 2021.
Federal Reserve Chair Jerome Powell said Wednesday that the upcoming elections would have no influence on the Fed’s decisions.
Despite the likely uptick, the U.S. economy, the world’s largest, has clearly cooled in the face of the highest borrowing rates in decades.
In his remarks Monday, Federal Reserve Chair Jerome Powell stressed that the Fed did not need to wait until inflation actually reached 2% to cut borrowing costs.
The June figures will qualify as another installment of the more good inflation data the central bank has been seeking. Should inflation remain low through the summer, most economists expect the Fed to begin cutting its benchmark rate in September.
The Federal Reserve has made “considerable progress” toward its goal of defeating the worst inflation spike in four decades, Chair Jerome Powell said in his testimony to the Senate Banking Committee.
Federal Reserve officials, who will end their latest policy meeting later Wednesday, are scrutinizing each month’s inflation data to assess their progress in their fight against rising prices.
