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.
Chair Jerome Powell is likely to underscore at a news conference Wednesday that the policymakers will need to see several more months of low inflation readings before they would consider reducing their key rate.
Friday’s report also showed that income growth slowed and spending cooled sharply in April, a trend that could help moderate economic growth and inflation in the coming months.
The latest snapshot comes as the Federal Reserve is grappling with inflation data that continues to surprise them.
The Federal Reserve’s more cautious outlook stems from three months of data that pointed to chronic inflation pressures and robust consumer spending.
A measure of inflation closely tracked by the Federal Reserve remained uncomfortably high in March, likely reinforcing the Fed’s reluctance to cut interest rates anytime soon.
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.
