A key inflation gauge showed price hikes slowed last month But economic jitters remain CNN Business

An Atlanta Fed measure of “sticky price” inflation held at 4.6% on a 12-month basis in January. The gauge is weighted toward items such as housing and insurance, and Fed officials are hoping that shelter costs decrease through the year, taking some pressure off the cost of living gauges. While increases in gas prices can play an outsize role in monthly fluctuations for the survey, the outlook for gas price increases was actually relatively benign.

Federal Reserve Economic Data

1. Following the release, traders sharply raised the odds that the Federal Reserve will cut its key interest rate by another quarter percentage point in December.
2. It could be that a softening jobs market provides the impetus for interest rate cuts, even if inflation is not as close to the Fed’s 2% annual target as desired.
3. Shelter carries a large weight in the CPI index and is experiencing faster inflation than other major categories.
4. He’s also worked at U.S. 1, Community News Service and the Middletown Transcript.
5. Most forecasts currently assume a December rate hike of 0.5 percentage point, the probability of which was 52% as of Wednesday afternoon, according to the CME FedWatch Tool, which measures rate hike probabilities.

That means that the cost of borrowing will How to buy fantom continue to increase for consumers, and things like auto financing, credit cards and other loans will get more expensive. Even before the Budget measures, however, inflation was expected to rise again into 2025 because of tougher comparisons with 2023, after dropping below the 2% target in recent months. Globally, oil prices have softened by around 10% over the month, but spot natural gas prices have surged around 30%, a massive monthly move. Petrol prices have fallen recently, and are significantly lower than in October 2023. Forecasters are calling for core prices to be stickier because a few key prices could bounce back from their readings in May, which were unexpectedly low, namely car insurance and airline tickets, economists at Deutsche Bank said in a commentary.

Inflation Estimates

The FOMC broadly anticipates that shelter costs should ease and perhaps help bring down inflation, but policymakers haven’t seen that yet. If that were to happen the large weight to shelter within the CPI could help get inflation back on track toward the FOMC’s 2% target. “It will likely take similar well-behaved inflation data in August (or a higher jobless rate) to assure a majority of voting members on the FOMC that inflation is moving convincingly to the 2.0% target,” wrote Priscilla Thiagamoorthy, senior economist at BMO Capital Markets. Federal Reserve officials will be closely looking at the inflation data, and at least one central banker said this weekend she still isn’t confident that inflation is moving lower. Therefore, it does seem probable that July’s inflation report will be less central to the FOMC’s decision making than it has been in recent years. Should inflation continue to cool, the FOMC may watch the jobs market ever more closely.

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Fed Wants Inflation Tamed Before Cutting Rates

For the record, the CPI report is released monthly by the Bureau of Labor Statistics, based on price data collected over the course of the month. Stock market futures nudged higher following the release while Treasury yields fell. Following the release, traders sharply raised the odds that the Federal Reserve will cut its key interest rate by another quarter percentage point in December. And with some upside risks to inflation, I still see the need to pay close attention to the price-stability side of our mandate while watching for risks of a material weakening in the labor market,” Federal Reserve Gov. Michelle Bowman told the Kansas Bankers Association on Saturday. Powell and other Fed officials have said they’re in no hurry to make cuts since the economy isn’t yet cracking under the weight of high interest rates.

The Morningstar Medalist Ratings are not statements of fact, nor are they credit or risk ratings. A change in the fundamental factors underlying the Morningstar Medalist Rating can mean that the rating is subsequently no longer accurate. As of Monday, financial markets were pricing in more than a 75% chance that the Fed will cut the rate at its September meeting, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data. The alpari forex broker review next Consumer Price Index release for April 2024 is expected to continue this year’s pattern of relatively higher inflation.

Though it has fallen sharply since its peak in mid-2022, inflation’s resilience almost certainly will assure no Fed rate cuts at its next meeting March 19-20, and possibly into the summer, according to current market pricing. Markets were rattled in January when the CPI data came in higher than expected, and Fed officials shifted their rhetoric afterward to a more cautious tone about easing policy. Economists had expected that prices would increase 0.2% on a monthly basis and slow to 2.3% annually, according to FactSet estimates. The core CPI accelerated 0.3% for the month and was at 3.3% annually, also meeting forecasts.

“The July CPI report is likely to further the case that inflation is quieting down even if it has not yet returned to the Fed’s target,” Wells Fargo economists said. Economists are wondering if a moderate inflation decline in July will be enough to convince skeptical Federal Reserve officials to begin lowering interest rates. With the surge in inflation since 2021 it’s understandable that inflation has received the bulk of the FOMC’s attention over recent years. However, as inflation has come closer to the FOMC’s target over the past year, jobs data has become more relevant to the FOMC’s decision making process. Nowcasts for inflation from the Federal Reserve Bank of Cleveland project that headline CPI will come in at 0.24% for the month of July and core CPI will be 0.27%.