Inflation eased again in February, but bank failures are complicating the Fed’s interest rate path
The new data underscores the reality is that inflation is still way too high and remains a top threat to households, businesses and the broader economy. Higher housing costs weighed heavily on the latest figures, contributing to more than 70 percent of the monthly increase. Food, recreation and household furnishings also rose in price, though naturalFor a year, the Federal Reserve has been in an aggressive fight to tame inflation, hoisting interest rates by the fastest pace in decades.
Barclays, which last week had beefed up its forecast to account for a half-percentage-point interest rate increase this month, now expects the Fed to hold off entirely until it’s clear that financial markets are on steady footing.The collapse of Silicon Valley Bank is, in some ways, a byproduct of the Fed’s aggressive efforts to raise borrowing costs after years of near-zero interest rates.
In testimony to Congress on March 7, Federal Reserve Chair Jerome H. Powell suggested the central bank could keep raising interest rates.
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