Topline
Annual inflation fell for a ninth-straight month in March—temporarily easing concerns about the future of the Federal Reserve’s tightening campaign as some experts worry lower global oil production and uncertainty over recent bank failures may complicate the path of inflation, and ultimately make it worse.
Federal Reserve Chairman Jerome Powell testifies during a Senate Banking Committee hearing.
Key Facts
Consumer prices rose 5% on an annual basis, according to data released by the Labor Department on Wednesday, marking the smallest year-over-year increase since May 2021 and coming in better than economists expected after a 6% spike in February.
Key Background
The Federal Reserve has pushed interest rates up to the highest level in 15 years in order to help temper inflation that remains well above the central bank’s historical 2% target. The labor market has started to show signs of weakening, and already the economic tightening has fueled a housing market correction, stock market downturn and just last month, a batch of high-profile bank failures. Nevertheless, officials have hinted they may not be done hiking rates, forecasting at least one more increase in their latest meeting on March 22.
Chief Critic
“Investors are increasingly concerned that the Fed’s overtightening… could steer the U.S. economy into a recession,” says Nigel Green, the CEO of advisory deVere Group, noting interest rate changes can take up to 18 months to ripple through the economy, slowing more rate-sensitive sectors (like housing and tech) first before spreading to others. “With inflation seemingly having peaked… officials now need to take their foot of the brake.”
This is a developing story. Please check back for updates.
Further Reading
Inflation Fell To 6% In February (Forbes)
Job Growth Unexpectedly Slows As Employers Freeze Hiring (Forbes)
Source: https://www.forbes.com/sites/jonathanponciano/2023/04/12/prices-rose-another-5-in-march-lowest-inflation-reading-in-nearly-two-years/