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Fed to Tread Cautiously on Rate Cuts Amid Rising Prices
Fed to Tread Cautiously on Rate Cuts Amid Rising Prices
Sputnik International
US inflation is soaring, and a recent upswing in unemployment figures pressure the Federal Open Market Committee to tread a fine line between consumer prices and the labor market before considering a rate cut.
2024-03-20T16:08+0000
2024-03-20T16:08+0000
2024-03-20T16:28+0000
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The Federal Reserve is unlikely to reduce interest rates on Wednesday, Fox News reports. But investors anticipate Chairman Jerome Powell’s speech to include any hint at the first first rate cut in 2024, after years of persistent inflation.The US Federal Open Market Committee (FOMC) is set to retain rates between 5.25 and 5.5 percent at its two-day policy meeting.However, Fed officials seem hesitant to reduce borrowing costs until inflation falls below the two-percent threshold they deem right for a healthy economy.But the current rise in the US unemployment rate, reaching a two-year peak, increases pressure on the central bank to strike a balance between price control and job creation.US inflationary pressure has not shown signs of easing sooner than policymakers anticipated. In February, annual consumer prices surged by 3.2 percent, exceeding economists’ forecasts.Prices have risen much faster for rent (5.8 percent), beef (9.2 percent) and drinks (27 percent). A recent report revealed that annual producer prices grew by 1.6 percent, surpassing last month’s expectations.Despite a 9.1 percent decrease in US consumer inflation, it is still higher than the Fed’s two percent benchmark.In an interview with FOX Business last week, Treasury Secretary Janet Yellen expressed regret over her previous insistence that inflation was merely "transitory." Yellen claime dprices would fall, but the dip might not be “smooth.”Meanwhile, some media speculate that Wall Street would be focused on the Fed’s 'Dot Plot' interest rate projections which indicate how much the FOMC could reduce rates this year and the next.Based on forecasts by economists at JPMorgan Chase and Bloomberg Economics, the FOMC might potentially improve its long-term federal funds rate projections due to ongoing inflationary pressures or improved productivity levels.
https://sputnikglobe.com/20230728/fed-inflation-tracker-pce-matches-retreat-in-broader-us-consumer-price-gauge-1112220810.html
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federal reserve rate cuts, us fed rate cut, us interest rate decision, us unemployment figures, us consumer price inflation.
federal reserve rate cuts, us fed rate cut, us interest rate decision, us unemployment figures, us consumer price inflation.
Fed to Tread Cautiously on Rate Cuts Amid Rising Prices
16:08 GMT 20.03.2024 (Updated: 16:28 GMT 20.03.2024) US inflation is soaring, and a recent upswing in unemployment figures pressure the Federal Open Market Committee to tread a fine line between consumer prices and the labor market before considering a rate cut.
The Federal Reserve is unlikely to reduce interest rates on Wednesday, Fox News reports.
But investors anticipate Chairman Jerome Powell’s speech to include any hint at the first first rate cut in 2024, after years of persistent inflation.
The US Federal Open Market Committee (FOMC) is set to retain rates between 5.25 and 5.5 percent at its two-day policy meeting.
However, Fed officials seem hesitant to reduce borrowing costs until inflation falls below the two-percent threshold they deem right for a healthy economy.
But the current rise in the US unemployment rate, reaching a two-year peak, increases pressure on the central bank to strike a balance between price control and job creation.
US inflationary pressure has not shown signs of easing sooner than policymakers anticipated. In February, annual
consumer prices surged by 3.2 percent, exceeding economists’ forecasts.
Prices have risen much faster for rent (5.8 percent), beef (9.2 percent) and drinks (27 percent). A recent report revealed that annual producer prices grew by 1.6 percent, surpassing last month’s expectations.
Despite a 9.1 percent decrease in
US consumer inflation, it is still higher than the Fed’s two percent benchmark.
In an interview with FOX Business last week, Treasury Secretary Janet Yellen expressed regret over her previous insistence that inflation was merely "transitory." Yellen claime dprices would fall, but the dip might not be “smooth.”
"The Fed's between a rock and a hard place. They gotta buy some time here so they can see more about the economy, about the inflation statistics before they have to decide to cut rates," Bob Doll, CEO of Crossmark Global Investments, told media.
Meanwhile, some media speculate that Wall Street would be focused on the Fed’s 'Dot Plot' interest rate projections which indicate how much the FOMC could reduce rates this year and the next.
Based on forecasts by economists at JPMorgan Chase and Bloomberg Economics, the FOMC might potentially improve its long-term federal funds rate projections due to ongoing inflationary pressures or improved productivity levels.
12 October 2023, 17:29 GMT
