Fed Rate Pause Is a Tough Call After Inflation Reaccelerates

Steve Matthews | Yahoo | Mar 14th, 2023
Category: Financial News

An acceleration in monthly core consumer prices seems likely to reinforce the Federal Reserve’ determination to raise interest rates to fight inflation, though the decision on next week’s move will be a tough call amid ongoing concern about financial turmoil.

February’s consumer price index, excluding food and energy, increased 0.5% last month and 5.5% from a year earlier, according to Bureau of Labor Statistics data out Tuesday. Economists see the gauge as a better guide to underlying inflation than the headline measure. CPI overall climbed 0.4% in February and 6% from a year earlier.

The challenge for the Fed now is how to prioritize inflation that is still far too high with growing financial stability risks in the unraveling of Silicon Valley Bank. Authorities stepped in over the weekend to provide a new backstop for banks to protect uninsured depositors.

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