from Bloomberg Television
Expect Higher Interest Rates Through the End of 2024. Fed Blames ‘Lack of Progress’ On Inflation
You’ll likely pay more to borrow until at least 2025, but now may be the time to lock in higher savings rates.
by Richard Trenholm
c|net
Federal Reserve Chairman Jerome Powell had some sobering words for those anxiously anticipating rate cuts in 2024: “The path forward is uncertain.”
The Fed on Wednesday decided to hold the federal funds rate at a target range of 5.25% to 5.50% for the sixth straight time after three months of hotter-than-expected inflation reports. Inflation currently sits at 3.5% year over year, according to the Consumer Price Index’s April 10 report.
At previous meetings this year, Powell said the committee needed more data to make a decision and stuck to its forecast of three rate cuts “at some point this year.” But on Wednesday, Powell noted that a “lack of progress” on inflation in the first quarter could delay those cuts.
Has Pay Kept Up with Inflation?
by Wendy Edelberg
The Brookings Institution
There are various ways to evaluate recent trends in real pay (i.e., nominal pay adjusted for inflation), including using different measures of pay, measures of inflation, and reference periods. These factors can lead to conflicting conclusions about the trends in real pay in the United States. In October 2023, we published a detailed analysis breaking down these differences.
The interactive below shows you the annualized percent change in real pay from a base fourth quarter of your choice to the most recent quarter with available data. For each time period of your choice, this interactive will show you the change in real pay using four different pay measures and two different inflation measures. You can hover over the legend or the bars themselves to see percent changes in pay. The title of each figure will show the time period over which the change is calculated.
Governments Could Stop Inflating if They Wanted, but They Won’t
by Daniel Lacalle
Mises.org
Price inflation is no coincidence. It is a policy. Governments, along with their so-called experts, attempt to persuade you that price inflation stems from anything other than the consistent, albeit slower, rise in aggregate prices year after year. Issuing more currency than the private sector demands, thus eroding its purchasing power and creating a constant annual transfer of wealth from real wages and deposit savings to the government.
Oil prices are not a cause of inflation but a consequence. Prices increase as more units of the currency used to denominate the commodity shift to relatively scarce assets. Therefore, oil prices do not cause inflation; they are one of the signals of currency debasement. Furthermore, if oil prices caused inflation, we would go from inflation to deflation quickly, not from elevated inflation to slower price increases.
I’m an Economist: Here Are My Predictions for Inflation if Biden Wins Again
by Yaël Bizouati-Kennedy
Yahoo! Finance
Earlier this year, Fed officials had indicated that they would implement three rate cuts. However, said officials have since been telegraphing that cuts will probably occur later than previously anticipated. The Fed seems to have now shifted to a “wait and see” approach due to both sticky inflation and strong economic data.
“In recent months, there has been a lack of further progress toward the Committee’s 2% inflation objective,” Fed officials said in a May 1 statement.
Jerome Powell On Stagflation
by Martin Armstrong
Armstrong Economics
“I don’t see the ‘stag’ or the ‘-flation’,” Fed Chairman Jerome Powell said during his Wednesday address.
Powell believed inflation would be “transitory.” He believed that the economy would come down for a “soft landing.” He believed we would enter the year and see numerous cuts due to waning inflation coming closer to the fictional 2% target. Yet again, Chairman Jerome Powell has missed the mark on stagflation.
If you really look at it, objectively, interest rates always rise during boom periods, and they decline during recessions and depressions. We will see increased inflation, probably into 2028 caused by shortages and war. But you’re looking at a declining economic growth, so that ends up being more like the economy of the 1970s, and you’re looking at what we call “Stagflation” where the inflation rate will be higher than economic growth.
Fed Keeps Rates Unchanged, Noting Progress On Inflation Has Stalled
by John Carney
Breitbart.com
Federal Reserve officials agreed on Wednesday to hold interest rates steady for the sixth consecutive meeting, signaling that they are willing to keep rates at the highest level in more than two decades for longer than previously expected and noting that progress on bringing down inflation has stalled.
The central bank left its benchmark federal funds rate unchanged in a range between 5.25 percent and 5.5 percent, as it awaits more evidence that inflation is sustainably falling to its two percent target.
The Fed last raised the fed funds rate in July, with Fed chairman Jerome Powell saying at the time that it was too soon to tell whether inflation was cooling enough to rule out further hikes. At the following meeting in September, the projections of Fed officials suggested that the Fed might raise rates one more time before the end of the year.
McDonald’s and Other Big Brands Warn That Low-Income Consumers Are Starting to Crack
Executives at some of America’s largest companies have said that consumers feel the pinch of higher prices.
by Alex Harring
CNBC.com
Some of America’s best-known corporations are saying their consumers are being pinched by inflation as prices continue rising.
Inflation has dominated corporate America’s discourse over the past three years following the pandemic-induced easing of monetary policy and trillions of dollars in Covid relief. Though the pace of price growth has cooled since the Federal Reserve began raising interest rates in early 2022, consumers are still feeling the squeeze — and often tightening purse strings — as costs continue climbing.
“It is clear that broad-based consumer pressures persist around the world,” McDonald’s CEO Chris Kempczinski said on the fast-food chain’s earnings call early Tuesday. “Consumers continue to be even more discriminating with every dollar that they spend as they faced elevated prices in their day-to-day spending.”
Buckle Up: Another Inflation Wave is Hitting as Economic Pain Continues to Worsen
from King World News
Another inflation wave is hitting as economic pain continues to worsen.
Fed’s Lack Of Confidence Is Telling
May 1 (King World News) – Peter Boockvar: There was not much of a change in the statement wording except the Fed added this, “In recent months, there has been a lack of further progress toward the Committee’s 2% inflation objective.” This is code for the Fed doesn’t have more confidence relative to the March meeting to commit to when to start cutting rates.
The surprise was in the QT tapering plans where expectations were widely held that Treasury drawdowns would be $30b per month from $60b but instead the Fed went down to $25b.
Inflation is Exhausting
Feeding the family in an era of Washington mismanagement.
by James Freeman
The Wall Street Journal
“McDonald’s Seeks to Make Menu More Affordable for Inflation-Weary Consumers,” reads a Journal headline today. Sometimes folks in the restaurant industry refer to such consumers as “price-weary.” However they are described, parents on a budget are tired of having to send too many dollars chasing after too few burgers. The Journal’s Heather Haddon reports:
McDonald’s said consumers across the globe are tightening their spending as the burger chain reported lower-than-expected quarterly sales growth.
Executives said Tuesday that economic pressure is building on consumers, resulting in declining restaurant visits across the industry. McDonald’s for months has warned of a weakening economy, but executives said the headwinds so far this year are steeper than previously anticipated…
Three Savings Moves to Make with Inflation Still Rising
by Joshua Rodriguez
CBS News
Inflation has been a cause for concern for some time now. In fact, in mid-2022, the Federal Reserve increased its target federal funds rate for the first time since 2018 in response to high COVID-era inflation. Since then, it has increased its benchmark rate several times, pushing it to a 23-year high, where it still stands today.
Though inflation seemed to be dwindling toward the end of 2023, price growth has gained a second wind with inflation coming in hot thus far in 2024. And while high inflation rates may make budgeting more difficult and debt more expensive, they can also make returns on deposit accounts more attractive.
With the federal funds rate high, earnings on some deposit accounts can outpace inflation.