Federal Reserve Pause Is Still Coming, Just Not Yet
The core consumer price index decelerated a bit in March from a month earlier but likely not enough to convince policymakers they have done enough to control inflation.
The March inflation data still had enough worrisome details to keep Jerome Powell up at night.
Photographer: Alex Wong/Getty Images
The Federal Reserve’s rate increases are coming to an end, and bond traders are falling over themselves to buy the pause.1But the latest inflation data Wednesday suggest that one more hike is probably in store.
The core consumer price index rose 0.4% in March from a month earlier, a slight deceleration that put the three-month annualized rate at around 5.1%. From the Fed’s perspective, it’s a decent outcome, just not good enough to alter its plan to raise rates by 25 basis points to a range of 5% to 5.25% when it meets May 2-3; that will most likely be the final hike. With unemployment still running at just 3.5%, Fed Chair Jerome Powell sees entrenched inflation as the primary risk to the economy, above and beyond the risk of causing a recession.2