{"id":9440,"date":"2024-04-12T12:07:04","date_gmt":"2024-04-12T17:07:04","guid":{"rendered":"https:\/\/nwfl4sale.com\/higher-prices-inflation-likely-to-delay-rate-cuts\/"},"modified":"2024-04-12T12:07:04","modified_gmt":"2024-04-12T17:07:04","slug":"higher-prices-inflation-likely-to-delay-rate-cuts","status":"publish","type":"post","link":"https:\/\/nwfl4sale.com\/higher-prices-inflation-likely-to-delay-rate-cuts\/","title":{"rendered":"Higher Prices, Inflation Likely to Delay Rate Cuts"},"content":{"rendered":"
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Fed policymakers need more confidence that inflation is steadily slowing to their target level before a rate cut. Interest rates affect mortgage rates. <\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/div>\n WASHINGTON \u2013 Consumer inflation remained persistently high last month, boosted by gas, rents, auto insurance and other items, the government said Wednesday in a report that will likely give pause to the Federal Reserve as it considers how often \u2014 or even whether \u2014 to cut interest rates this year.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Prices outside the volatile food and energy categories rose 0.4% from February to March, the same accelerated pace as in the previous month. Measured from a year earlier, these core prices are up 3.8%, unchanged from the year-over-year rise in February. The Fed closely tracks core prices because they tend to provide a good read of where inflation is headed.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Wednesday\u2019s figures represent a disappointment for the White House. Republican critics of President Joe Biden have sought to pin the blame for high prices on the president and use it as a cudgel to derail his re-election bid. Polls show that despite a healthy job market, a near-record-high stock market and a decline inflation from its peak, many Americans blame Biden for high prices.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n The March figures, the third straight month of inflation readings well above the Fed\u2019s 2% target, provide concerning evidence that inflation is stuck at an elevated level after having steadily dropped in the second half of 2023. The latest numbers threaten to torpedo the prospect of multiple rate cuts this year. Fed officials have made clear that with the economy healthy, they\u2019re in no rush to cut their benchmark rate despite their earlier projections that they would do so three times this year.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n The report \u201cpours cold water on the view that the faster readings in January and February simply represented the start of new-year price increases that were not likely to persist,\u201d Kathy Bostjancic, chief economist at Nationwide, said in a research note. \u201cThe lack of moderation in inflation will undermine Fed officials\u2019 confidence that inflation is on a sustainable course back to 2% and likely delays rate cuts to September at the earliest and could push off rate reductions to next year.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n On Wall Street, traders sent stock prices tumbling and bond yields rising, reflecting fear that the Fed may delay interest rate cuts indefinitely. The broad S&P 500 stock index was off about 1% in late-morning trading<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Chair Jerome Powell has stressed that the Fed\u2019s policymakers need more confidence that inflation is steadily slowing to their target level before they will support a rate cut. Lower rates could fuel faster growth and potentially push inflation higher. Powell\u2019s stance has elevated the profile of the monthly inflation data in determining when the Fed might start cutting rates. Lower rates would lead, over time, to reduced borrowing costs for businesses and consumers.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Overall consumer prices rose 0.4% from February to March, the same as in the previous month. Compared with a year ago, prices rose 3.5%, up from a year-over-year figure of 3.2% in February.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n The Fed closely tracks a separate inflation gauge that has been coming in below the consumer price index, released Wednesday. Yet those figures will likely come in high enough to concern policymakers.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n The persistence of elevated U.S. inflation complicates Biden\u2019s claims to be making steady progress against higher prices. The president has argued that further improvement would be possible if Republicans in Congress would back his policies, which include efforts to lower costs for prescription drugs, reduce so-called \u201cjunk fees,\u201d and write off some student debts.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Biden had previously suggested that lower inflation would lead the Fed to cut rates, but he hedged that prediction on Wednesday. \u201cThis may delay it a month or so,\u201d Biden said at a news conference with Japanese Prime Minister Fumio Kishida, adding that he\u2019s \u201cnot so sure\u201d exactly what the Fed would do.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n The costs of owning a vehicle were a key reason why prices jumped last month: Auto insurance surged 2.6% in March and are up a dramatic 22% from a year ago. That increase reflects, in part, the rise in new-car prices over the past two years.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Average auto repair costs increased 1.7% from February to March and are up a sharp 8.2% from a year earlier. And the price of gas to power most vehicles surged 1.7% last month. Prices for new and used cars, though, fell slightly.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Clothing costs jumped 0.7% in March, the second straight month of sizable increases, though they have barely risen over the past year. Grocery prices, though, were unchanged last month and are just 1.2% higher than they were a year ago, providing some relief to consumers after the huge spikes in food prices in the previous two years.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n The chronically elevated inflation so far this year does suggest that American consumers, on average, remain confident enough to keep spending despite steady price increases, said Laura Rosner-Warburton, senior economist at MacroPolicy Perspectives, a consulting firm. Likewise, she said, the surge in auto insurance and repair costs reflect the previous sharp increases in auto sales prices.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cIt means that the consumer\u2019s in good shape and accepting price increases still,\u201d Rosner-Warburton said.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Though inflation has plummeted from its peak of 9.1% in June 2022, average prices are still well above where they were before the pandemic. This has meant hardships for many lower-income families, whose wages may not have fully kept up with rising prices.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Derrick Chubbs, president of the Second Harvest Food Bank of Central Florida, said his organization is providing 300,000 meals a day, even more than the 250,000 it supplied in November 2022. The people his organization serves, he said, increasingly include homeowners. And most of them are employed.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Chubbs said the beneficiaries typically live paycheck-to-paycheck and are vulnerable to any sharp change in their financial circumstances. Most are still struggling to recover from the jump in costs over the past three years, including in rents, child care and car ownership \u2014 practically a necessity in a region with limited public transportation.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cIf anything throws them off, it\u2019s going to take them a while to recover,\u201d Chubbs said. \u201cJust because things get better, that doesn\u2019t mean that I\u2019ve caught up with everything.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/div><\/div>\n <\/p>\n <\/p>\n