Former Kansas City Fed President Thomas Honig responded to Jerome Powell’s statement that the Fed was not ready to start cutting interest rates “coast-to-coast.”
A closely watched inflation report on Wednesday is expected to show that progress in combating price pressures within the economy slowed again in March.
Economists expect the consumer price index, which measures a wide range of goods including gasoline, health care, groceries and rent, to rise 3.4% in March, up from 3.2% the previous month.
monthly, inflation is seen The rate of increase was 0.3%, slightly down from the 0.4% recorded in February.
“March CPI and PPI reports likely indicate another month of strong inflation,” Comerica Bank economists said Monday. ”gasoline price Rising again in March as OPEC+ producers extend supply cuts, Middle East conflict threatens to escalate, Ukraine attacks Russian refinery, and US crude production flattens near record highs did. ”
Why are groceries still so expensive?
Other parts of the report are also expected to note a slowdown in the decline in inflation. Core prices, which exclude more volatile food and energy measures, are projected to rise 3.7% annually. This is down slightly from February’s headline increase of 3.8% and suggests that underlying price pressures remain strong.
of federal reserve The target rate is 2%.
“We don’t have the tailwinds of lower oil and gasoline prices that we saw in late 2023, when we saw a significant and sustained easing of inflationary pressures,” said Greg McBride, chief financial analyst at Bankrate. “Progress has slowed so far in 2024, and expectations for the date and number of Fed rate hikes are shrinking, especially as oil prices rise to five-month highs. ” he said.
US economy adds 303,000 jobs in March, bigger than expected
Central banks are watching the report closely for evidence that inflation is finally calming as policymakers try to decide when and how deep to cut interest rates.
Policymakers opened the door to rate cuts this year, but they rebounded against positive market expectations. Jerome Powell Fed Chairman During testimony on Capitol Hill last week, he said policymakers were on track to cut rates in 2024, but were not prepared to do so until they were confident inflation was under control. Ta.
Gas prices displayed at gas stations in Chicago on March 12, 2024. (Photo by Scott Olson/Getty Images/Getty Images)
“The Fed has been hesitant to read too much into several consecutive months of better-than-expected inflation data, but it may change its mind in the third month,” said Chris Larkne, managing director of trading and investments. E*Trade.
Central bank officials are also considering increase in employment Consumers’ inflation expectations in determining monetary policy.
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Inflation is putting severe economic pressure on most American households, forcing them to pay for necessities like food and rent. The burden falls disproportionately on low-income Americans, whose paychecks are already tight and are highly exposed to price fluctuations.
Although the inflation rate has fallen from its peak of 9.1%, the consumer price index has increased by a staggering 18.49% compared to January 2021, just before prices began to soar.
