Inflation has eased from its peak in 2022, but remains a concern for consumers and policymakers. While the Federal Reserve has made progress in its fight against inflation, uncertainty persists about the path ahead.
Inflation has gradually trended down from a peak of about 9% in 2022, but this past year, consumers still felt the pain from four cumulative years of fast-rising prices. To close out 2024, goods and services are now generally about 20% more expensive than when President Joe Biden entered office. While inflation rapidly decelerated in the latter half of 2022 and in 2023, it declined this year, although not as fast as might have been hoped.
The Federal Reserve is targeting 2% inflation, and while inflation still isn’t there, the Fed has made progress in its goals. Mark Hamrick, senior economic analyst at Bankrate, said there is much uncertainty in the months ahead.. “And, you know, it appears that perhaps the current part of the journey is a little more challenging for the Fed to get to its 2% target.” There are a few gauges of inflation, but the consumer price index is the most closely watched one, and the personal consumption expenditures index is the one the Fed tracks. CPI inflation was tracking at 3.1% in January and has now fallen to 2.7% after briefly dipping to 2.4% in September. PCE inflation began the year at 2.6% and has fallen to 2.3% after falling to a low of just under 2.1% in September. The Fed raised interest rates to historic levels in response to inflation, with the central bank bringing its rate target to a peak of 5.25% to 5.50%. But the Fed finally cut interest rates in September, the first time in over four years. The Fed cut again in November and analysts expect more downward revisions in the year ahead. Inflation was a top political consideration. Many voters said the past few years of high inflation was the biggest issue on their minds heading into the voting booth. The higher interest rate environment also made consumers like the economy was in bad shape, even as unemployment remained low and economic growth was heart
INFLATION FEDERAL RESERVE INTEREST RATES ECONOMIC GROWTH CONSUMER PRICES
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