Inflation Cools to 4.9 Percent in April, but Still Far Above Federal Reserve Goal

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According to Bureau of Labor Statistics data, the economy is continuing to cool.

According to BLS figures released on Wednesday, the inflation rate in April was 4.9 percent, down from a 5 percent increase in March. These numbers, which are from the Consumer Price Index (CPI), are in line with expectations.

What’s the bad news? The Core CPI, which excludes volatile energy and food prices, rose by almost a half percent between March and April. This is up to 5,5% over the previous year. Core CPI stood at around 5.1 per cent in March.

Wall Street has a positive feeling about the numbers.

The markets reacted positively, as futures turned positive due to lower Treasury yields.

The Fed has not been able to reduce prices despite its efforts. The central bank increased interest rates by 5 percentage points in 10 successive increases starting in March 2022. This is the highest rate of borrowing in 16 years.

Since June 2022, the CPI has dropped significantly. The Fed’s annual inflation target of 2% is still well above.

Wall Street is worried about whether the Federal Reserve will keep raising interest rates. The Fed has had this discussion, but they have raised rates by 25 basis points earlier this month. This puts the rate of interest between 5 and 5,25 percent. It is the highest in 16 years.

The Wall Street Journal provides a summary of economic news:

Stock futures have edged up. After the CPI report, futures for S&P 500 and Dow industrials turned positive. Nasdaq 100 and Dow industrials also gained. Russell 2000 contracts outperformed the Russell 2000, rising 1.7%.

Bond yields are edging lower. The 10-year Treasury rate fell to 3.509% from 3.520% on Tuesday.

The Stoxx Europe 600 fell. Stoxx Europe 600 fell. In Asia, the Shanghai Composite Index and Hang Seng ended lower.

The oil markets have retreated. Brent crude futures dropped 1% to $76.64 per barrel. Energy Information Administration’s weekly report on demand and supply is due at 10:30 am.

Used cars, however, are one of the most significant increases in consumer prices. Index for used cars and truck rose by 4.4 percent since March. This is the first increase in over a year and the biggest jump since mid-2021.

Since it reached its peak of 9.9 per cent in June, the inflation rate has changed. In the beginning, high commodity prices and supply chain problems were to blame. In recent years, the demand for workers was one of many factors. The hot job market and rising wages were also factors.

The BLS reported a higher-than-expected increase in employment last week. The U.S. economic sector created 253,000 new jobs in April, which was much more than the 180,000 predicted by economists before Friday’s report.

The unemployment rate is now 3.4 percent compared to 3.5 percent back in March. With inflation hovering around 5 percent and a jobs report of this nature, the Fed may be under pressure to raise rates one more time.