Another high inflation report last month is likely to lead more Federal Reserve officials to anticipate a fourth consecutive half-percentage-point rate rise will be warranted at their meeting this September.
The Fed has already indicated it will raise rates by a half point at its meeting next week and that it is very likely to do so again in July. Officials have said that they would continue to raise rates at that pace if inflation doesn’t show signs of a convincing slowdown.
The Labor Department reported on Friday that the consumer-price index rose 8.6% in May from the same month a year ago, pushing inflation to a new 40-year high. Rising fuel prices and supply-chain disruptions from Russia’s war against Ukraine have sent prices up in recent months.
The Fed raised rates last month by a half percentage point for the first time since 2000, bringing its benchmark short-term interest rate to a range between 0.75% and 1%.
Fed Chairman Jerome Powell said the central bank could continue to raise rates at that pace until it sees conclusive evidence that inflation is easing, and Friday’s report offered the opposite.
“Truthfully, this is not a time for tremendously nuanced readings of inflation. We need to see inflation coming down in a convincing way…and until we see that, we’re going to keep going,” Mr. Powell said in an interview last month. “We’re not going to assume that we’ve made it until we see that, and we’re not seeing that right now.”
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June 10, 2022 at 09:44PM
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Consumer Price Index for May: Live Updates - The Wall Street Journal
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