But as pressure on the nation rises, there is a silver lining for the people doing it the toughest.
officials signaled that they still expect to cut their key interest rate three times in 2024 despite signs that inflation stayed surprisingly high at the start of the year. Yet they foresee fewer rate cuts in 2025, and they slightly raised their inflation forecasts.
“The risks are really two-sided here,” Powell said. "We’re in a situation where if we ease too much or too soon, we could see inflation come back. And if we ease too late, we could see unnecessary harm to employment.” As a whole, Wednesday's forecasts suggest that the policymakers expect the US economy to continue enjoying an unusual combination: a healthy job market and economy in tandem with inflation that continues to cool — just more gradually than they had predicted three months ago.
Most economists have pegged the Fed’s June meeting as the most likely time for it to announce its first rate cut, which would begin to reverse the 11 hikes it imposed beginning two years ago. The Fed’s hikes have helped lower annual inflation from a peak of 9.1 per cent in June 2022 to 3.2 per cent. But they have also made borrowing much costlier for businesses and households.
Though consumer inflation has tumbled since mid-2022, it has remained stuck above 3 per cent. And in the first two months of 2024, the costs of services, such as rents, hotels and hospital stays, remained elevated. That suggested that high borrowing rates weren’t sufficiently slowing inflation in the economy’s vast service sector.
In most respects, the US economy remains remarkably heathy. Employers keep hiring, unemployment remains low, and the stock market is hovering at record highs. Yet average consumer prices remain much higher than they were before the pandemic — a source of unhappiness for many Americans for which Republicans have sought to pin blame on Biden.
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