Inflation edged higher in March, surpassing economists' expectations and casting doubt on the Federal Reserve's plans to cut interest rates. Core prices, excluding food and energy, also rose above expectations. This marks the third consecutive month of inflation exceeding the Fed's target of 2%.
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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