alexa certify

U.S. inflation is rising. Will the Fed change course?


U.S. consumer prices increased more than expected, putting investors on high alert for additional signs of inflationary pressure. Thus far, the Federal Reserve maintains its stance, but higher inflation may push the agency toward raising interest rates.

Some investors think that the consumer price index report published on Wednesday was not enough to prompt the Fed to take action. Despite that, the news fueled worries that the U.S. economy is moving toward sustained higher inflation and caused turmoil in the markets.

Peter Tuz, the president of Chase Investment Counsel in Charlottesville, Virginia, stated that the argument is whether this bout of inflation will be transitory or here to stay. He thinks it’s here to stay until commodity costs and labor costs mitigate some. If it proves the truth, the Fed may have to change its easy policy sooner than expected.

On Thursday, major U.S. stock indexes tumbled down by about 2% each due to the U.S. Labor Department report. The latter showed that the consumer price index soared by 0.8% last month, seeing the largest gain since June 2009. Meanwhile, the “core” reading, which excludes the more volatile energy and food portions, surged forward by 0.9%.

Gregory Daco, the chief U.S. economist at Oxford Economics in New York, noted that the economy is hotter than expected but not overheating, adding that the agency is not going to change any policy on a single report.

Investors are waiting for upcoming economic reports for additional clues, especially U.S. producer prices data for April on Thursday.


Is the current increase in consumer prices significant? 


According to the report, consumer prices skyrocketed at the fastest pace in more than a decade in April. That intensified a debate in Washington and Wall Street over whether inflation might reach levels that would cause households to struggle and ultimately undermine the recovery.

However, economists and central bank officials stated that the numbers reflected pandemic-driven trends, and they would most likely prove temporary.


  • Support
  • Platform
  • Spread
  • Trading Instrument
User Review
0 (0 votes)

Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. If you are interested in following the latest news on the topic, please follow Finance Brokerage on Google News.

You might also like

Leave a Reply

Subscribe to Our Newsletters

Have the best of Finance Brokerage News delivered directly to your mailbox. Subscribe now to receive the latest market news.