Federal Reserve’s preferred inflation gauge eased last month for the first time in 2024

Federal Reserve’s preferred inflation gauge eased last month for the first time in 2024

WASHINGTON (AP) — The Federal Reserve’s closely watched price gauge cooled slightly last month, a sign that inflation may be easing after running high in the first three months of this year .

The report released Friday by the Commerce Department showed that prices, excluding volatile food and energy categories, rose 0.2% from March to April, compared with 0.3% the previous month. . Measured compared to the previous year, so-called “basic” prices rose by 2.8% in April, as in March.

Inflation fell sharply in the second half of last year, but then stabilized above the Fed’s 2% target in the first months of 2024. With polls showing As more expensive rents, groceries and gas spark anger among voters as the presidential campaign heats up, Donald Trump and his Republican allies have sought to shift the blame to President Joe Biden.

A stream of recent remarks from Fed officials stressed their intention to keep borrowing costs high for as long as necessary to completely defeat inflation. As recently as March, Fed policymakers collectively predicted three rate cuts this year, starting in June. Yet Wall Street traders now expect just one rate cut this year, in November.

An influential Fed official, John Williams, president of the Federal Reserve Bank of New York, said Thursday that he expects inflation to begin to cool again in the second half of the year. Meanwhile, Fed Chairman Jerome Powell has made clear that the central bank is prepared to keep its benchmark rate at 5.3%, its highest level in 23 years.

The central bank raised its benchmark interest rate from near zero to its current 15-month high, the fastest rise in four decades, to try to control inflation. The result was significantly higher rates for mortgages, auto loans, and other forms of personal and business borrowing.

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