April inflation report genericness
Has inflation peaked?
This is the question that preoccupies most economists before the last inflation data released this week, which should broadly show that consumer prices moderated slightly in April.
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The Labor Department releases the much-anticipated Consumer Price Index report Tuesday morning, offering a fresh look at April’s surge in inflation. Economists expect the gauge, which measures a basket of goods including gas, healthcare, groceries and rents, to show prices jumped 8.1% in April over the period from the previous year, slightly below the previous month’s 40-year high of 8.5%. On a monthly basis, inflation is expected to have increased by 0.2%, a sharp drop from the 1.2% recorded in March.
“April’s numbers should show that inflation peaked last month, both headline and excluding food and energy,” said Tim Drayson, chief US economist at Legal and General Investment Management. “But inflation is still likely to exceed the Fed’s target over the next two years and will require further hikes beyond the aggressive repricing now expected by markets.”
Fed policymakers voted unanimously last week to raise the benchmark benchmark rate by 50 basis points for the first time in two decades as they seek to rein in consumer demand. Officials also announced they would begin trimming the Fed’s massive $9 trillion balance sheet, which nearly doubled in size during the pandemic as the central bank bought mortgage-backed securities and other bonds. of the Treasury to continue to borrow at low prices.
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Collectively, these measures mark the most aggressive tightening of monetary policy in decades as the Fed races to catch up with inflation.
Chairman Jerome Powell signaled that the Fed was ready to take even more action to reduce demand and calm inflation “quickly”, while promising that there would be future rate hikes of half a point on the table at future Fed meetings.
“Inflation is far too high, and we understand the difficulties it is causing, and we are moving quickly to bring it down,” Powell said last week. “Assuming that economic and financial conditions evolve in line with expectations, there is a general feeling within the committee that additional increases of 50 basis points should be on the table at the next two meetings.”
Rising inflation is eating away at the sharp increases in wages and salaries American workers have seen in recent months – bad news for President Biden, which saw its popularity drop as consumer prices rose. The White House blamed the price spike on supply chain bottlenecks and other pandemic– induced disruptions in the economy, as Republicans pinned it on the president’s massive spending agenda.
Biden is already in damage control mode before the newest inflation data, holding a press conference on Tuesday to try to reassure Americans about sky-high consumer prices, which have become a major political liability for Democrats.
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The president highlighted his administration’s efforts to reduce the price spike, including releasing 180 million barrels of oil – a record amount – from the country’s strategic oil supply, calling on companies to cut prices and urging the auto and tech industries to bring supply chains to the United States
“I want every American to know that I take inflation very seriously,” Biden said in a speech from the White House. “It is my main national priority.”
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