Fed ‘pause’ on rate hikes in doubt after strong US data
Federal Reserve policymakers got a dose of unexpectedly strong economic data on Friday that bolstered the case for further monetary policy tightening to bring down persistently high inflation.
Consumer spending surged 0.8% last month from March, the Commerce Department reported. That’s good news as far as showing the economy’s not on the precipice of a recession, but bad news for policymakers looking for a slowdown that could ease upward pressure on prices.
Inflation by the Fed’s preferred gauge actually accelerated to 4.4% from a year ago, the report showed, with core prices – a key measure of underlying pressures – gaining 4.7%, up from the 4.6% pace in March.
The Fed targets 2% inflation.
Coupled with what appeared to be some progress in Washington on a deal to raise the debt limit and avoid a catastrophic U.S. default, the data throws doubt on whether the Fed will indeed “pause” its rate-hike campaign, as Fed Chair Jerome Powell signaled it might earlier this month.
This report’s information was first seen on REUTERS; to read more, click this link.