David Bahnsen, managing partner at the Bahnsen Group, analyzes the Federal Reserve’s plans to combat inflation for Barney & Co.
Get noticed Inflation Report The data is due to be released Wednesday morning and is expected to show that inflation continues to ease as the issue has come to the forefront of the presidential election campaign and the Federal Reserve considers the possibility of cutting interest rates as early as next month.
Economists expect the Consumer Price Index, which measures the price of a range of goods including gasoline, health care, groceries and rent, to rise 2.9% from a year ago, according to a consensus estimate from Trading Economics. That would be a slight decrease from June’s inflation rate of 3.0%, but Trading Economics analysts see inflation stabilizing at 3.0%.
On a monthly basis, inflation is expected to edge up by 0.2% after falling 0.1% in June. Core inflation, which excludes volatile food and gasoline prices, is expected to edge down slightly to 3.2% year-on-year, the consensus forecast.
These numbers are Federal Reserve The target rate is 2%. But Fed Chairman Jerome Powell has signaled that the central bank could move to cut rates before inflation falls to that level if data like Wednesday’s inflation report shows the cooling trend continues.
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Economists expect inflation to stabilize at 3% year-on-year. (Photo: Liao Pan/China News Service/VCG via Getty Images/Getty Images)
Powell said, Waiting for inflation to hit 2% could lead to excessive tightening of economic activity and cause policymakers to overshoot their target, he said last month at the Economic Club of Washington, D.C.
“What that means is that if you wait until inflation gets down to 2 percent, you’ve probably waited too long, because the tightening, or the level of tightening, that we have in place is still having the effect of pushing inflation down below 2 percent,” he explained.
“We want to be more confident that inflation is declining sustainably and moving towards our objective.” 2% target“What would lift it would be better inflation data, and we’ve been getting that data recently,” Powell said at the time.
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Federal Reserve Chairman Jerome Powell said continued improvement in inflation measures strengthens the case for cutting interest rates. (Photo by Andrew Harnick/Getty Images/Getty Images)
Inflation began surging in early 2021 due to pandemic-related supply chain disruptions and a historic increase in federal government spending. Inflation hit a 40-year high of 9.1% in June 2022, prompting the Fed to raise its benchmark federal funds rate to a 23-year high of 5.25%-5.50% to curb inflation. The rate has remained at this level since July of last year.
The inflation report and the highly anticipated decision on a possible Fed interest rate cut next month came as the impact of inflation on the economy has become a hot topic for the economy. Presidential Election.
Former President Trump During a discussion on X-Space with billionaire entrepreneur Elon Musk on Monday, he said voters are unhappy with the Biden-Harris administration’s handling of the issue.
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Inflation and other economic issues are playing a major role in the presidential race between former President Trump and Vice President Harris. (Trump: Robert Gauthier/Los Angeles Times via Getty Images | Harris: Rachel Aston/Las Vegas Review-Journal/Tribune News Service via Getty Images/Getty Images)
“What really pisses them off is Kamala and Biden “We’ve allowed it to happen to our economy. Inflation is a disaster,” Trump said. “Inflation eats away at you, no matter how much you make. If you’re a working person, if you’re middle-income earner, four years ago, five years ago, people had a lot of money saved. Today, they’ve spent all their money and they’re borrowing to survive.”
“A lot of people are worried about the economy, they’re worried about inflation, which is effectively a tax on people who save and just a form of taxation on people who work every day,” Musk said. “If we can solve the government spending problem, we’ll solve the inflation problem and people’s standard of living will improve.”
Vice President Harris President Trump is expected to unveil a plan this week to fight inflation and reduce costs, and at a rally in Detroit last week he said prices remain too high and blamed businesses for the high costs facing American consumers.
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“We believe in a future where the cost of living is lower. American Family “That way, they have a chance not just to survive, but to get ahead. Because while our economy is strong by many measures, the prices of everyday items like food remain too high. You and I know that,” Harris said.
“As Attorney General, I went after drug cartels, and as President, my number one priority will be fighting to lower prices, taking on big corporations who engage in illegal price gouging, taking on big corporate landlords who unfairly raise rents for working families, taking on big pharmaceutical companies and capping prescription drug prices for all Americans,” Harris said.
FOX Business’ Megan Henney contributed to this report.
