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Federal Reserve minutes: Some officials highlighted worsening inflation last month

Some Federal Reserve policymakers argued at their most recent meeting in March that inflation was likely worsening, even before the government reported Wednesday that price increases re-accelerated last month.

Quick Read

  • Inflation Concerns at the Fed: During their March meeting, some Federal Reserve policymakers expressed worries that inflation might be intensifying, a concern validated by the latest government data showing a continued rise in inflation rates.
  • Skepticism Over Price Increases: Despite suggestions from economists that early 2023 price hikes might be temporary annual adjustments, certain Fed officials deemed these increases too widespread to be dismissed as mere statistical outliers.
  • March Meeting Consensus: All attending Fed officials concurred that the inflationary trends in January and February did not bolster their confidence in a steady decline towards the 2% inflation target.
  • Core Inflation Data: Excluding volatile categories like food and energy, core inflation rates experienced a significant jump from February to March, with a 3.8% increase compared to the previous year.
  • Implications for Rate Cuts: The persistently high inflation rates, contrary to expectations of a decrease, suggest that the Fed might reconsider the anticipated three quarter-point interest rate reductions previously forecasted post-March meeting.

The Associated Press has the story:

Federal Reserve minutes: Some officials highlighted worsening inflation last month

Newslooks- WASHINGTON (AP) —

Some Federal Reserve policymakers argued at their most recent meeting in March that inflation was likely worsening, even before the government reported Wednesday that price increases re-accelerated last month.

According to the minutes of the Fed’s March 19-20 meeting released Wednesday, all 19 Fed officials generally agreed that high inflation readings in January and February “had not increased their confidence” that inflation was falling steadily to their 2% target.

Many economists had suggested that the outsize price increases in the first two months of the year probably reflected one-time increases that often happen at the start of a year as companies impose annual price increases. But some Fed officials at the March meeting disputed that assessment, and said the higher prices were “relatively broad-based and therefore should not be discounted as merely statistical aberrations.”

On Wednesday, that assessment appeared to be confirmed. The government reported that for a third straight month, consumer inflation rose at a pace faster than is consistent with the Fed’s target level. Excluding volatile food and energy costs, core prices jumped 0.4% from February to March. Such core prices were 3.8% higher than they were a year earlier.

Wednesday’s data figures raised fears that inflation appears, for now, to be stuck above the Fed’s 2% target. It has made little progress this year after having steadily dropped in 2023. The leveling-off of inflation makes it less likely that the Fed will implement the three quarter-point rate cuts that the officials had projected after their March meeting.

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