While the US central bank has lifted the benchmark lending rate 10 times in a row since early last year, it is anticipated to pause this week.Consumer inflation in the United States cooled for an 11th straight month on an annual basis in May, the Labor Department said Tuesday, in an encouraging sign for policymakers.The data comes as Federal Reserve officials are set to begin a two-day policy meeting on Tuesday, with the figures expected to have a bearing on their interest rate decision at the end of the gathering.
While the US central bank has embarked on an aggressive campaign of rate hikes, lifting the benchmark lending rate 10 times in a row since early last year, it is widely anticipated to pause this week.
Government figures released Tuesday show that the consumer price index (CPI), a key gauge of inflation, jumped 4.0 per cent from a year ago in May, in line with analyst expectations and down from a 4.9 per cent rise in April.
This brings it to the lowest level in around two years, and less than half the peak rate of 9.1 percent in mid-2022.But analysts caution that Fed policymakers are likely looking for a more sustained trend of cooling growth before they end their cycle of rate hikes.
On a monthly basis, CPI rose 0.1 per cent in May, decelerating from 0.4 per cent in April, the Labor Department said.
Excluding the volatile food and energy components, consumer inflation was up 5.3 per cent over the last 12 months.
“The index for shelter was the largest contributor to the monthly all items increase, followed by an increase in the index for used cars and trucks,” said the Labor Department in a statement.
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Lingering worries
Oren Klachkin, lead US economist at Oxford Economics, told AFP: “A month’s worth of data won’t ease policymakers’ worries. They want to see clear trends that inflation is cooling and that the economy is slowing.””We haven’t had that so far, so there’s a risk of more rate hikes in the second half of 2023,” he added.
For now, halting further rate hikes will allow policymakers more time to assess the economic impact of existing increases, which come on top of recent pressures in the banking sector.
Rubeela Farooqi, chief US economist at High Frequency Economics, added in a note that the figures reflect that underlying inflation “remained elevated but showed improvement,” and would unlikely change expectations of the Fed’s rate decision.
“As for the future path of policy, incoming information on inflation, the labor market as well as considerations about credit conditions will determine whether the (Federal Open Market Committee) is done raising rates or if more tightening is needed,” she said.
Source: hindustantimes
In other news- Donald Trump pleads not guilty in hoarding secret documents case, leaves court
Trump was allowed to leave court without conditions or travel restrictions and no cash bond was required.Former U.S. President Donald Trump pleaded not guilty on Tuesday to federal criminal charges that he unlawfully kept national-security documents when he left office and lied to officials who sought to recover them.
Trump’s plea, entered before U.S. Magistrate Judge Jonathan Goodman in a federal court in Miami, sets up a legal battle likely to play out over coming months as he campaigns to win back the presidency in a November 2024 election. Experts say it could be a year or more before a trial takes place.Trump was allowed to leave court without conditions or travel restrictions and no cash bond was required. Goodman ruled that Trump was not allowed to communicate with potential witnesses in the case. Read more
