The Federal Reserve’s (FED) officials are looking for signs. That its recent round of hikes in interest rates is having an impact on inflation. Although consumer price index (CPI) growth in the U.S. expanded more slowly in January, it was still higher than expected.
According to data released by the Labor Department on Tuesday, Consumer price index (CPI) for month fell to 6.4% versus 6.5% for December, marking the seventh consecutive month of sluggish growth. An analysis of 6.2% was predicted by analysts.
The core result for the year-over-year period. Which excludes volatile goods like food and energy, came out at 5.6%, low from 5.7% with in previous month. And more than economists’ expectations of 5.5%.
Many economists, including Fed officials, keep a close eye on the core figure. Because they think it offers a more accurate picture of the direction that inflation will take going forward.
Monthly, the index grew by a seasonally revised 0.5%, also in line with expectations, reflecting an increase in energy prices. The core figure went up by 0.4%.
With a goal of bringing down skyrocketing prices. The federal reserve has aggressively increased interest rates from near-zero to the range from between 4.5% – 4.75% in even less than a year.
Jerome Powell, the chairman of the Federal Reserve, has cautioned that rates may have to stay higher for long given reports suggesting strong labour market growth. Even though the Fed announced a smaller 25 basis point boost at its most recent policy meeting.
This tightness has raised hopes that U.S. economy could be able to avoid a recession even as high rates threaten to slow down output.
These factors include indications that inflation has peaked and is gradually ebbing backwards to the Fed’s target rate of 2%. Officials from the Fed have cautioned that this result is indeed far from certain.