Main Topic: U.S. inflation and the Federal Reserve's efforts to control it.
Key Points:
1. U.S. inflation has declined for 12 straight months, but consumer prices increased 3% year-on-year in June.
2. The Federal Reserve aims to reduce inflation to about 2% and plans to raise its key federal funds rate to over 5%.
3. The Fed is concerned about high inflation due to a strong labor market, rising wages, and increased consumer spending, and aims to slow the job market to control inflation.
The Federal Reserve must consider the possibility of a reacceleration of the economy, potentially impacting its inflation fight, as retail sales in July were stronger than expected and consumer confidence is rising, according to Richmond Fed President Thomas Barkin.
Federal Reserve Chair Jerome Powell aims to bring inflation back down to its 2 percent target while avoiding causing a recession, as he addresses the uncertain economic outlook at the annual conference in Jackson Hole, Wyoming.
As Jerome Powell, the chair of the U.S Federal Reserve, prepares to speak at the Jackson Hole symposium, the big question is whether he will signal a major shift in how central banks deal with inflation, particularly regarding interest rates and inflation targets. Some economists are suggesting moving the inflation target range from 2-3 percent, while others argue for higher targets to give central banks more flexibility in combating recession. The debate highlights the challenges of setting and changing formal inflation targets and the ongoing changes in the factors that drive growth and inflation.
U.S. Federal Reserve Chairman Jerome Powell stated that restrictive monetary policy will continue until inflation slows, and the central bank is prepared to raise rates cautiously; the price of Bitcoin briefly dipped before recovering, while traditional markets saw modest gains.
The stock market rally attempt experienced a setback as the S&P 500 and Nasdaq saw a downside reversal, indicating that the correction is still ongoing, while retailers faced challenges and Treasury yields reached a 15-year high. Meanwhile, Federal Reserve Chair Jerome Powell warned of potential rate hikes due to high inflation.
Federal Reserve Chair Jerome Powell warned that the fight against inflation still has a long way to go, emphasizing the need for extended periods of elevated interest rates to restore price stability. Powell stated that although inflation has cooled, the improvement may be temporary, and the Fed is committed to lowering inflation to their 2% target.
The latest inflation data suggests that price increases are cooling down, increasing the likelihood that the Federal Reserve will keep interest rates unchanged in their upcoming meeting.
BlackRock's Rick Rieder suggests that the Federal Reserve can now end its inflation fight as the labor market in the US is cooling down after gaining 26 million jobs in the past three years.
The Federal Reserve's preferred inflation gauge increased slightly in July, suggesting that the fight against inflation may be challenging, but the absence of worse news indicates that officials are likely to maintain interest rates.
The Federal Reserve's attempt to combat inflation is not making any progress, as shown by the latest jobs report and inflation data, indicating that inflation is likely to worsen.
The Federal Reserve is expected to hold interest rates steady this month, but inflation could still lead to additional rate increases.
Financial markets are preparing for a rebound in U.S. inflation in August, driven by higher energy prices, which could disrupt expectations of easy inflation control by the Federal Reserve.
Investors and the Federal Reserve will have to wait for inflation to return to acceptable levels, as the Consumer Price Index report for August 2023 shows consumer prices rising at half the pace compared to a year ago, despite a jump in gas prices.
The Consumer Price Index is expected to show an increase in inflation in August, with headline inflation rising to 3.6% and core inflation easing to 4.4%, but the market is accustomed to this trend and the Federal Reserve is unlikely to change its rates at the upcoming meeting.
The latest inflation report is expected to show a steady increase in consumer prices, with economists predicting a 3.6% overall inflation compared to last year, indicating that inflation is gradually coming down but still remains above the Federal Reserve's target.
Cryptocurrency prices remained stable as inflation in the U.S. surpassed economists' expectations, with Bitcoin trading at around $26,100 and Ethereum experiencing a slight dip of 0.5%. The Federal Reserve will consider this report, among other factors, for its upcoming interest rate announcement on September 20. While inflation has decreased since June, it still exceeds the Fed's target of 2% annually. Core inflation, excluding volatile food and energy costs, decreased to 4.3% in August compared to July's 4.7%.
Stronger-than-expected U.S. economic data, including a rise in producer prices and retail sales, has sparked concerns about sticky inflation and has reinforced the belief that the Federal Reserve will keep interest rates higher for longer.
The Federal Reserve faces a critical decision at the end of the year that could determine whether the US economy suffers or inflation exceeds target levels, according to economist Mohamed El-Erian. He suggests the central bank must choose between tolerating inflation at 3% or higher, or risking a downturn in the economy.
The positive momentum surrounding Bitcoin's price is fueled by expectations that the Federal Reserve will not hike rates again this year, while market participants remain optimistic despite the strength of the United States Dollar Index.
The Federal Reserve is expected to keep interest rates steady and signal that it is done raising rates for this economic cycle, as the bond market indicates that inflation trends are moving in the right direction.
The Federal Reserve is leaving its key interest rate unchanged as it moderates its fight against inflation, but plans to raise rates once more this year, as policymakers remain concerned about inflation not falling fast enough.
The Federal Reserve officials signal that they believe they can control inflation without causing a recession, with forecasts of higher economic growth and unchanged inflation outlook.
The U.S. Federal Reserve kept interest rates steady but left room for potential rate hikes, as they see progress in fighting inflation and aim to bring it down to the target level of 2 percent; however, officials projected a higher growth rate of 2.1 percent for this year and suggested that core inflation will hit 3.7 percent this year before falling in 2024 and reaching the target range by 2026.
Stocks rebound and Treasury prices rise after three Federal Reserve officials warn of possible further rate hikes to control inflation, with the officials uncertain if the battle against inflation is over.
Despite recent market volatility and central bank decisions, the focus should remain on inflation, which is expected to continue on a downward trajectory, leading to potential gains in the stock market in the fourth quarter.
Inflation is expected to rebound in 2024 due to a mismatch between supply and demand created by the shift from services to goods during the pandemic, as well as a chronic shortage of workers, according to BlackRock strategists. This could lead to higher interest rates and a higher risk of recession.
The Federal Reserve's preferred measure of inflation decreased in August, indicating that efforts to combat inflation are progressing, although there are still price growth pressures that could lead to further interest rate hikes by the central bank.
Higher gas prices drove an increase in an inflation gauge tracked by the Federal Reserve in August, but measures of underlying inflation slowed, suggesting overall price pressures are moderating and raising the likelihood that the Fed will leave interest rates unchanged in its next meeting; however, the combination of higher gas prices and sluggish income growth may weaken consumer spending and mark a slowdown from last summer's healthy pace of spending.
Federal Reserve officials indicate that monetary policy will remain restrictive for a while to bring inflation back to 2%, but there is ongoing debate over whether to increase rates further this year.
The chaos in Washington and uncertainty surrounding a possible government shutdown could make it less likely for the Federal Reserve to raise interest rates again this year, as the economy and inflation appear to be cooling off.
The September CPI report is expected to show that inflation remains above the Fed's target, increasing the likelihood of a rate hike and raising inflation expectations for 2023, potentially leading to further upside risk to rates from Treasury auctions.
The dollar remains steady as U.S. producer prices show a moderation in inflation, leading to speculation that the Federal Reserve is done with interest rate hikes.
The upcoming monthly inflation report is expected to show that inflation in the US is cooling off, with overall prices for consumers rising by 0.2% compared to August and 3.6% compared to a year ago, indicating slower price increases in September than in August. However, if the report reveals that inflation remained higher than expected, especially in core areas, it may prompt the Federal Reserve to raise interest rates again, further slowing the economy.
The report on consumer prices in September shows that inflation remains steady but still poses challenges, leading economists to predict that the Federal Reserve will keep the possibility of a final interest rate increase this year open.
Consumer prices in the US grew at the same pace in September as in August, indicating that progress in controlling inflation may be stalling, prompting Federal Reserve officials to remain cautious with interest rate decisions.
Despite a slight improvement in month-to-month price gains, inflation remains a challenge for the Federal Reserve as prices continue to rise, particularly in areas such as housing and gas, burdening families and straining budgets. The Fed's efforts to control rising costs for gas, groceries, and rent are limited, leaving policymakers searching for effective solutions.
The Federal Reserve's upcoming meeting sparks speculation about interest rate hikes, but few consider if the central bank knows how to combat inflation, which is addressed in this episode of What's Ahead.
