Inflation ticked up again in March compared with the year before — in yet another sign that the economy doesn’t need high interest rates to come down any time soon.
Major stock indexes flashed red at the open, with the Dow Jones Industrial Average, the S&P 500 and the Nasdaqwith November’s presidential election. The Fed works hard to distance itself from politics, but central bankers are bound by their calendar. Wednesday’s report dashed expectations for an initial cut in June.
Policymakers will also splice the report for narrower readings that help them gain a sharper sense of how inflation is pulsing through the economy. For example, a key measure that strips out more volatile categories like food and energy rose 0.4 percent in March, as it did for the two previous months. That won’t offer much comfort to officials who are especially focused on parts of the economy where inflation can become stickiest.
The Fed entered the year bolstered by six months of encouraging data, and notable progress since inflation soared to 40-year highs in the middle of 2022. But prices went in the other direction in, coming in hotter than expected and disrupting the Fed’s remarkable streak of welcome news. At that point, the question was whether the start of 2024 had simply brought predictable plot twists. Wednesday’s report seemed to signal a broader trend.
Source: Loan Digest (loandigest.net)
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