Inflation in the U.S eased slightly in April but still remained elevated, media reports said on Wednesday.
Moderating price pressures is good news for the US as that gives the Federal Reserve room to pause.
The consumer price index (CPI) rose by a below-forecast 4.9 percent from a year earlier, the first sub-5 percent reading in two years. Notably, economists had forecast the rate to be 5 percent.
The annual CPI peaked at 9.1 percent last June, posting its biggest increase since November 1981, and is subsiding as last year’s initial surge in energy prices following Russia’s invasion of Ukraine drops out of the calculation.
But the reactions to the latest US inflation report were mixed.
For some analysts, the inflation report does not give a clear signal on Federal Reserve’s rate path.
“Today’s consumer inflation report supports the case for the Fed to seriously contemplate a pause in rate hikes in June, but does not support any near-term rate cuts,” said Scott Anderson, chief economist at Bank of the West in San Francisco.
Inflation has definitely moderated from overheated rates last year. But it still remains elevated and above the Federal Reserve’s target of 2 percent.
“On balance, inflation is still too high and it is not going to fall back to 2% if it increases 0.4% a month,” Chris Low, chief economist at FHN Financial in New York, told Reuters.
The Federal Reserve’s dichotomy is whether to look at inflation and hike rates or focus on the banking crisis. The aggressive rate hikes over the past year have hurt the banking industry heavily. But the central bank had no choice but to list rates because of soaring inflation.
Now, the domino effect of banks collapsing is keeping the US central bank on its toes.
For all the latest business News Click Here
