Interest to remain high until US consumer inflation drops - Fed
ALBAWABA – The consumer inflation in the United States fell to 4.9 percent in April, according to a statement by the U.S. Labor Department on Wednesday.
The April rate remains close to the 5 percent inflation levels reported a month earlier, in March, news outlets reported, but it is still lower than expected.
Economists have forecasted that inflation in the U.S. will remain at 5 percent. But this decline cites the lowest rate achieved by the U.S. Federal Reserve Board (Fed) since April, 2021, as reported by the Financial Times.
Overall, annual inflation has fallen sharply since hitting a 40-year high of 9.1 percent in June, 2022, according to The Guardian.
However, prices are still rising at twice the annual rate targeted by the Fed, which was set at 2 percent, the British news outlet claimed.
The U.S. consumer price index, in its most recent issue, showed that prices are rising 0.4 percent over the month, up from 0.1 percent in March.
Since March 2022, the Fed has raised the interest rate by nearly 5 percent, in an attempt to curb inflation.
The latest was earlier this month, May, which was the 10th consecutive rate hike in a little over a year.
Core annual inflation, which drives volatile energy and food prices, declined slightly to 5.5 percent, in line with forecasts, the Financial Times underlined.
US consumer inflation forecasts
But earlier in May, Fed chair Jerome Powell indicated that the central bank may pause rate hikes as the Fed assesses their impact on inflation.
But he clearly stated that interest rates are likely to remain high, as long as inflation remains elevated.
On Tuesday the New York Fed president, John Williams, warned that inflation may remain an issue for a while, despite interest hikes, he told Economic Club of New York.
“Because of the lag between policy actions and their effects, it will take time for the [Fed’s] actions to restore balance to the economy and return inflation to our 2% target,” The Guardian quoted him saying.
