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Inflation showing no recent signs of slowing is leaving U.S. Federal Reserve policymakers challenged this week as they grapple to characterize their next steps, Reuters reports.
The Fed is expected to hold its benchmark interest rate steady at 5.25%-to-5.5% at its April 30-May 1 meeting as well as a key judgment in the current policy statement—that inflation “remains elevated.”
The rate and judgment must remain in place after the pace of price increases accelerated over the first three months of the year.
“The Fed has simply run into a brick wall,” Citi Global Chief Economist Nathan Sheets said after data released on Friday showed the PCE index increased at a 2.7% annual pace in March versus 2.5% in February, while the number stripped of volatile food and energy prices was 2.8%, matching February. “This is very strong data and it is not data that has given them any confidence they are meaningfully on their way to 2% … The Fed is simply going to have to wait.”
