A measure of inflation closely tracked by the Federal Reserve remained uncomfortably high in March, likely reinforcing the Fed’s reluctance to cut interest rates anytime soon and underscoring a burden for President Joe Biden’s re-election bid. Prices rose 0.3% from February to March, the same as in the previous month.
A clearance sign is displayed at a retail clothing store in Downers Grove, Ill., Monday, April 1, 2024. On Friday, April 26, 2024, the Commerce Department issues its March report on consumer spending. WASHINGTON — A measure of inflation closely tracked by the Federal Reserve remained uncomfortably high in March, likely reinforcing the Fed’s reluctance to cut interest rates anytime soon and underscoring a burden for President Joe Biden’s re-election bid.
After peaking at 7.1% in 2022, the Fed’s favored inflation index steadily cooled for most of 2023. Yet so far this year, the index has remained stuck above the central bank’s target rate. More expensive gas and higher prices for restaurant meals, health care and auto repairs and insurance, among other items, have kept the overall pace of price increases elevated. With new-car prices up sharply in the past few years, auto repair and replacement costs have risen especially fast.
The chronically elevated measures of inflation have become a source of frustration for the Fed, whose policymakers had projected as recently as last month that they expected to cut their benchmark rate three times this year. Most economists expected the cuts to begin in June. More recently, though, several Fed officials, including Chair Jerome Powellto cut their key rate, a move that would eventually lead to lower rates for mortgages, auto loans, credit cards and many business loans.
Despite the continuing inflation pressures, robust growth in jobs and average wages has allowed many American consumers to continue spending at a healthy clip, supporting a still-durable economy. That helps explain why Fed officials have said they can afford to keep borrowing rates where they are for now. The economy didBeginning in March 2022, the Fed raised its benchmark rate 11 times to attack the worst bout of inflation in 40 years.
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