Staff Reports
Inflation up to 2.7% for the year ending in March, according to the personal consumption expenditures price index, which the Federal Reserve likes to use. This is not good news for the Fed, which is trying to keep inflation under control by keeping interest rates high. Economists expected inflation to be 2.6%, so this is higher than they thought. The Fed’s target was 2% inflation in the PCE index.
Inflation rose 0.3% from February to March, which was about what economists expected. Core PCE inflation, which doesn’t count energy and food prices, went up to a 2.8% year-over-year rate.
The chief economist at FWDBONDS, Chris Rupkey, thinks this news isn’t what the Fed wanted. He says the Fed might not cut rates as much as they planned to because of this inflation.
Fed’s preferred inflation metric rose to 2.7% in March https://t.co/hU9DFbESA7
— Financial Times (@FT) April 26, 2024
Yesterday, the gross domestic product report showed that the economy didn’t grow as much as people expected in the first quarter of the year. It only grew at a 1.6% rate, while economists thought it would grow at a 2.5% rate.
This inflation report comes after two other inflation reports for March—the consumer price index and the producer price index. The CPI said inflation grew to 3.5% in March, more than expected, and the PPI went up 0.6 percentage points to 2.1%.
Many economists are wondering when the Fed will start cutting rates. They were hoping it would happen soon, but now they’re not so sure because of the high inflation reports. The Fed’s interest rate target has been 5.25% to 5.50% for a while now, and it might stay that way for a while longer.
