Some economists believe if inflation keeps slowing and the economy shows signs of improvement, a July interest rate hike could be the Federal Reserve's last.
A food shopper searches for vegetables July 1, 2023 at a supermarket in South Burlington, Vermont. The inflation rate for food and other durable goods was 9.7% in May 2023. U.S. inflation is expected to post its lowest level in more than two years in a highly anticipated report being released Wednesday — a slowdown that, if sustained, could lead the Federal Reserve to halt its interest rate hikes later this year.
Economists expect used-car prices to keep falling over the coming months. And even housing costs, which have risen significantly, have begun to cool, as apartment construction has reached a four-decade high. "They’re going to want more than one or two months of decent inflation data before they’ll start to feel confident that inflation is really coming down and they don’t have to do much more," said Alan Detmeister, an economist at UBS. "We think they’ll have it by the time they get around to the September meeting."When Fed officials meet in September, the government's inflation reports for both July and August will have been released.
Many economists have said that President Joe Biden’s stimulus package in March 2021 intensified the inflation surge. At the same time, though, inflation also jumped overseas, even in countries where much less stimulus was put in place. Russia's invasion of Ukraine also caused a spike in energy and food prices globally.
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