In the USA, too, prices have risen sharply since the beginning of the Ukraine crisis.
(Photo: Bloomberg)
Dusseldorf Inflation in the US has fallen again. The Labor Department announced on Wednesday that US consumer prices rose 5.0 percent in March compared to the same month last year. This is the ninth straight decline in the rate.
In February, the US inflation rate was 6.0 percent, down from 6.4 percent in January. Economists had forecast an inflation rate of 5.2 percent for March.
The further decline in the inflation rate shows that the monetary policy of the US Federal Reserve (Fed) is having an effect. She had raised key interest rates in several steps in order to suppress inflation. The interest rate is currently in the range of 4.75 to 5.0 percent.
However, core inflation rose. It was 5.6 percent in March, after 5.5 percent in February. Core inflation excludes energy and food prices that are particularly susceptible to fluctuations. Monetary policymakers look particularly closely at this key figure. Rising core inflation is seen as an indication that inflation has already spread to large areas of the economy and is threatening to solidify.
This does not paint a clear picture for the Fed. On May 3, she will decide on the further interest rate strategy. There has long been speculation on the markets that the monetary watchdogs will not be able to raise interest rates any further. After the banking crisis in March, monetary policymakers must also ensure that the stability of the financial system is guaranteed.
Far from inflation target
Monetary policymakers are divided on the next steps: John Williams, head of the regional Fed in New York, spoke out in favor of another interest rate hike on Tuesday, as the Fed has not yet achieved its goal in fighting inflation. The head of the Fed in Chicago, Austan Goolsbee, on the other hand, called for “caution and patience” from his colleagues. One must first observe the effects of the banking crisis and the much tighter credit conditions. There is great uncertainty about how the problems in the financial sector will continue to develop. “So we should be careful,” Goolsbee said.
Fed Chairman Jerome Powell left all options open after the last interest rate decision in mid-March. Further rate hikes may be appropriate but are not guaranteed.
In addition to the inflation data, the situation on the labor market is also relevant for the Fed’s decision. It had cooled down significantly in March, but not as much as economists had feared. However, the unemployment rate was lower than expected. In combination with inflation, which is still above the target value of two percent, this speaks against an interest rate break in the near future.
The prospect of a less hawkish Fed is fueling optimism in equity markets. The futures turn positive after the publication and thus signal a friendly opening of the US stock exchanges. The Dax immediately jumped to a new high for the year of 15,827 points.
The yield on the two-year US Treasury bond fell below four percent. Short-term bonds are particularly sensitive to interest rate developments and their prospects. Ten-year bonds yielded 3.362 percent. The dollar index, which compares the currency’s value to other major currencies, fell slightly.
More: The banking crisis could dissuade the Fed from its interest rate course