Some Fed policymakers argued that inflation likely worsened at its most recent meeting in March, even before the government reported Wednesday that price increases had reaccelerated last month.
Minutes of the March 19-20 Fed board meeting released Wednesday showed that all 19 Fed officials agreed that high inflation in January and February meant that inflation had steadily declined to its 2% target. There was general agreement that there was “no increased confidence” that
Many economists believe that the large price increases in the first two months of 2024 may reflect one-off price increases that often occur at the beginning of the year, as companies impose annual price increases. It was hinting.
But at its March meeting, some Fed officials disputed this assessment, saying that the rise in prices was “relatively widespread and therefore should not be discounted as a mere statistical anomaly.”
Wednesday appeared to confirm that assessment.
The government reported that consumer inflation rose for the third straight month at a faster pace than matching the Fed’s target level.
Core prices, which exclude volatile food and energy costs, rose 0.4% from February to March.
These core prices rose 3.8% compared to the same period last year.
Wednesday’s economic data raised concerns that inflation is currently running above the Fed’s 2% target.
After a steady decline in 2023, little progress has been made this year.
With inflation flattening, the Fed is unlikely to cut rates by the three quarter points that officials had expected after its March meeting.
The minutes indicated there was “uncertainty” among policymakers about the sustainability of inflation and said they expected “some heterogeneity in monthly inflation statistics.”
According to the minutes, “nearly all” officials were in favor of lowering the benchmark interest rate at some point this year.
However, rising inflation in March could overturn this view by the time of the next meeting at the end of this month.
Wednesday’s inflation data roiled financial markets and sent stock prices plummeting.
Many economists expected the Fed to begin lowering rates at its June meeting.
But on Wednesday, several analysts pushed back their forecasts to July or September in light of March’s inflation data.
Some economists have suggested the Fed may not cut rates at all this year. In addition to chronically rising inflation, job growth last month was strong, providing evidence that the economy remains healthy despite the Fed raising its benchmark interest rate to a 23-year high last year. ing.
