If the labor market is very resistant in the United States, inflation goes hand in hand with that stubbornness. Prices rose 3.5% in March in the annualized comparison, more than expected by analysts, who estimated an increase but up to 3.4%, which is why there has been a more pronounced rebound than calculated.
This represents the second consecutive increase, after 3.2% in February (up from 3.1% in January), and this reinforces the question of how much longer it will take for the Federal Reserve (Fed) to revise interest rates downwards. interest, at the highest level (5.25-5.50%) in 23 years. There are growing doubts about its timing, while there is growing concern that progress in lowering inflation has stalled.
The consumer price index, a broad measure of the cost of goods and services across the economic spectrum, increased 0.4% compared to February. Analysts bet on 0.3%. Excluding the most volatile items such as energy and food, core inflation accelerated by 0.4%, reaching a year-over-year percentage of 3.8%, when estimates were 0.3 % and 3.7%
Investors, eagerly awaiting these cuts, have already lowered their expectations. If in 2023 they predicted up to six or seven snips throughout this year, now it is down to three in a very optimistic plan. The start date is also being delayed. With March ruled out, the projections are now in June, although this new data may cause the governors of the US central bank to rethink it and postpone it until September.
One of its leaders even hinted this week that, given that there is no way to reach the 2% target, the cuts could be postponed until 2025. The stock markets are very nervous and, given these omens, the New York Stock Exchange has been very volatile days, with a downward trend.
As soon as the inflation data was known, the futures market fell 300 points, a sign of the frustration experienced by investors, who fear a recalcitrant stance from the Federal Reserve.
So this report comes with markets on the brink as the Fed expresses caution about the direction of monetary policy. Its leaders do not stop repeating calls for patience regarding loosening their restrictive tactics with the statement that they still do not see sufficient evidence that inflation is on a consolidated path towards its desired 2%.
But it is not lost on them either, as Jerome Powell, president of the Fed, has reiterated that while lifting the brakes prematurely can cause a relapse, maintaining containment longer than necessary also represents a dangerous risk. Once again the specter of recession arises.
The cost of housing and energy acted as the decisive factors in this increase. The price of energy rose 1.1%, after an increase of 2.3% in February, while residential spending, which represents just over a third of influence on the price index, shot up 0.4 % compared to February, up to 5.7% more compared to a year ago.
Expectations that housing will slow throughout the year is a central issue to the Fed's thesis that inflation cools enough to allow for an interest rate cut.
The price of food rose 0.1% compared to a month ago, giving an annual total of 2.2%. Health care rose 0.6%.
