• World - North America
  • Updated: March 14, 2023

US Eased Inflation Still Poses Challenge For Federal Reserve

US Eased Inflation Still Poses Challenge For Federal Reserve

The inflation in the United States slowed down slightly in February but still poses a challenge for the Federal Reserve (Fed).

The government said on Tuesday that prices increased 0.4% last month, just below January’s 0.5% rise.

Yet excluding volatile food and energy costs, so-called core prices rose 0.5% in February, slightly above January’s 0.4% gain.

Even though prices are rising much faster than the Fed wants, some economists expect the central bank to suspend its year-long interest rate hikes when it meets next week.

When the Fed raises its key rate, it typically leads to higher rates on mortgages, auto loans, credit cards and many business loans.

When measured against prices a year ago, inflation in the country has been easing for eight months.

In February, consumer prices climbed 6% from 12 months earlier, down from January’s 6.4% year-over-year increase and well below a recent peak of 9.1% in June.

Yet it remains far above the Fed’s 2% annual inflation target.

That is a sharp shift from just a week ago, when Chair Jerome Powell suggested to a Senate committee that if inflation didn’t cool, the Fed could raise its benchmark interest rate by a substantial half-point at its meeting on March 21-22.

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