- ORIGINAL NEWS
This week provided a reminder that inflation isn’t going away anytime soon
- SUMMARY
Recent economic data has painted a grim picture, indicating that inflation remains stubbornly persistent and is unlikely to subside soon.
The New York Federal Reserve’s consumer survey reveals that people’s long-term inflation expectations have risen, suggesting that they doubt the Federal Reserve’s ability to achieve its 2% inflation target.
Consumer spending has slowed, with retail sales growth lagging behind inflation.
This indicates that consumers are becoming more cautious with their spending due to higher prices.
Wholesale prices, which represent the cost of goods before they reach consumers, have also surged significantly, adding to inflationary pressures.
The Fed’s aggressive interest rate hikes and bond holdings reduction have failed to curb inflation effectively.
As a result, the Fed is likely to keep interest rates higher for longer than previously anticipated.
The combination of stubbornly high inflation, rising consumer expectations, and slowing consumer spending has led economists to believe that a rate cut is unlikely anytime soon.
Instead, the Fed may need to consider further rate hikes if inflation does not improve significantly.
- NEWS SENTIMENT CHECK
- Overall sentiment:
negative
Positive
Negative
“Wholesale inflation rose 0.6% in February, much more than expected”
“Voters blame businesses more than Biden for sticky inflation”
“The stubbornly high prices appeared to take their toll on consumer behavior and expectations.”
“While substantially lower than its mid-2022 peak, inflation has proved resilient despite the Fed’s 11 rate hikes totaling 5.25 percentage points and its moves to cut its bond holdings by nearly $1.4 trillion.”