Tuesday, February 27, 2024

Decreasing inflation… Will the US economy breathe a sigh of relief? | economy

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US market data from Reuters showed a decline in one of the main indicators of inflation last November. Although the personal consumption price index rose 2.6% from a year earlier, the increase was less than the previous October, which was around 2.9%. This was the first decline in the index since the start of 2020, due to lower energy and food costs, the Commerce Ministry said.

US President Joe Biden hailed this as an important development, noting that “inflation in the past six months has been at 2% of the previous level of the pre-corona pandemic period”. Excluding volatile sectors such as food and energy, core inflation eased to an annual rate of 3.2%, slightly lower than last October.

This decline in inflation is consistent with the strategy Central Reserve (U.S. Federal Reserve) to maintain Interest rates To control inflation towards the long-term target of 2% at the highest level in 22 years.

The steady consumption of the US economy and the performance of the labor market raised hopes for a slight decline in inflation, as its rate began to decline without triggering an economic recession.

Cautious faith

Despite the positive signs, “challenges facing American families continue due to rising costs,” Biden stressed, urging companies to ensure price stability.

Michael Pearce, an economist at Oxford Economics, described the data as “encouraging reading”, showing that consumption growth is slowing at a more steady pace, while inflationary pressures are disappearing.

In light of these developments, economists expect a firmer shift in Federal Reserve policy in the near future as inflationary volatility shows signs of weakness, particularly in the services sector. However, experts warn that an unexpected drop in inflation could prompt markets to demand deeper interest rate cuts, which could affect future policymaking.

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Nadia Barnett
Nadia Barnett
"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

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