WASHINGTON, Jan 12 — US consumer prices rose solidly in December, with the annual increase in inflation the largest in nearly four decades, which could bolster expectations that the Federal Reserve will start raising interest rates as early as March.
The economy is experiencing high inflation as the Covid-19 pandemic snarls supply chains. The high cost of living is weighing on President Joe Biden’s approval rating. “The laundry list of reasons for the Fed to begin removing monetary policy accommodation is growing,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “Inflation would need to decelerate rapidly to take some of the pressure off the Fed and this is unlikely to occur.”
But soaring Covid-19 cases, driven by the Omicron variant, could slow progress towards normalization of supply chains.
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