Inflation Rises in March, Raising Concerns for Fed

Gas prices are seen at a gas station in Riverwoods, Ill., Monday, April 1, 2024. Inflation edged higher in March in another sign of elevated price pressures that have cast doubt on how soon the Federal Reserve may cut interest rates as high prices linger.according to the Labor Department

March is the third consecutive month of inflation being well above the Fed’s preferred target of 2%. Fed officials have been hoping to see the figures start to decline and chalk the first two hot readings to start the year up to being seasonal quirks and not an indication that inflation is sticking above 2%, but Wednesday’s report is unlikely to soothe those concerns.

Central bankers had forecast three rate cuts at a Federal Open Markets Committee meeting earlier this year, but when to start that process is a difficult balance to strike. If rates are cut too soon, officials risk inflation spiraling out of control, while waiting too long risks an economic downturn.

“The recent data do not, however, materially change the overall picture, which continues to be one of solid growth, a strong but rebalancing labor market, and inflation moving down to 2% on a sometimes bumpy path,” Powell said at a conference last week.

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Inflation Rises in March, Casting Doubt on Fed's Interest Rate CutInflation edged higher in March, signaling elevated price pressures and raising doubts about the Federal Reserve's plans to cut interest rates. The Consumer Price Index (CPI) rose by 3.5%, surpassing economists' expectations and February's rate of 3.2%. Core prices, excluding food and energy, also exceeded expectations at 3.8%. The cost of gasoline and shelter contributed to the rise in CPI, while food prices remained relatively stable. This marks the third consecutive month of inflation surpassing the Fed's target of 2%.
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US Inflation Rate Rises to 3.5% in MarchThe US inflation rate rose to 3.5% for the year ending in March, raising concerns for the Federal Reserve's plan to cut interest rates. This is also bad news for President Joe Biden. Core inflation, excluding food and energy prices, remained at 3.8% for the year ending in February.
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