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Jonathan Levin

If the Fed Fails to Raise Rates, It Will Be a Sign of Panic

For all the concern about Silicon Valley Bank, the latest consumer price index shows why the central bank can’t abandon its inflation fight just yet.

No need to risk credibility.

No need to risk credibility.

Photographer: Samuel Corum/Bloomberg

The Federal Reserve’s war on inflation isn’t over. After five days of turmoil in the banking sector, financial markets had all but written off the prospect of additional interest-rate increases. But the latest consumer price index shows why that assessment was premature.

The new numbers Tuesday showed the core CPI rose 0.5% from a month earlier, exceeding (albeit only slightly) the median forecast of economists in a Bloomberg survey. On a three-month annualized basis, the report put core CPI at around 5.2%, highlighting the challenge facing the Fed as it tries to juggle both sides of its inflation and full employment dual mandate.