US inflation eases but stays high, putting Fed in tough spot.
WASHINGTON — U.S. consumer price increases eased slightly from January to February but still pointed to an elevated inflation rate that is posing a challenge for the Federal Reserve at a delicate moment for the financial system.
that if inflation didn’t cool, the Fed could raise its benchmark interest rate by a substantial half-point at its meeting March 21-22. When the Fed raises its key rate, it typically leads to higher rates on mortgages, auto loans, credit cards and many business loans. “We would be surprised if, just one week after going to great lengths to support financial stability, policymakers risked undermining their efforts by raising interest rates again,” Hatzius wrote in a separate note Monday.
The possibility of a Fed pause underscores the sharp shift in the nation’s financial system and economy in barely one week. Last Tuesday, Powell had told the Senate Banking Committee that if , the Fed would likely raise rates at this month’s meeting by a sizeable half-point.
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