The latest measures of U.S. inflation have turned out to be hotter than expected
WASHINGTON — Two weeks ago, Chair Jerome Powell suggested that the Federal Reserve was “not far” from gaining the confidence it needed that inflation was headed sustainably toward its 2% target level, which would allow it to start cutting its benchmark interest rate.
It was a tantalizing suggestion, because a cut in the Fed's key rate has typically boosted the economy by reducing the cost of lending, from mortgages to business loans. It might also benefit President Joe Biden's re-election bid, which is facing widespread public unhappiness over price levels across the economy.
Since then, though, the latest inflation measures have turned out to be hotter than expected: A government report showed that consumer prices jumped from January to February by much more than is consistent with the Fed's target. A second report showed that wholesale inflation also came in surprisingly high — a possible sign of inflation pressures in the pipeline that could cause consumer price increases to stay elevated in the coming months.
A key question for Powell and the 18 other officials on the Fed's interest-rate-setting committee is how — or whether — those figures have altered their timetable for cutting rates. Powell will surely be pressed on the topic at a news conference Wednesday after the Fed ends its latest two-day meeting. The central bank's policymakers will also issue their updated quarterly projections for how they foresee the economy and interest rates changing in the months and years ahead.
Their previous such projections in December showed that the officials expected to cut their benchmark rate three times this year, up from a previous forecast
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