Goolsbee Sees More ‘Trade-Offs’ Ahead After Hot Inflation Report

An accelerating iꦡnflation rate may force the Federal Reserve to more carefully balance its efforts to reduce price pressures and keep unemployment low, Chicago Fed President Austan Goolsbee said at an event today.

Inflation data over the first three months was worse than expected, Goolsbee said at a Social Finance Institute event in Cambridge, Massachusetts. That could force the Federal Reserve into “trade-offs” as it looks to tame prices while maintaining low unemployment, he said according to a Bloomberg report.

Today’s Consumer Price Index (CPI)  report showed progress toward the inflation annual target of ꦕ2% was stalling out. It also came as several Fed officials said they need to see further progress toward the goal before supporting interest rate cuts.&nb🌟sp;

Als🥃o at the event, Richmond Fed President Thomas Barkin said today’s inflation report showed that it may take more time than anticipated for inflation to fall lower. 

-Terry Lane

FOMC Meeting Minutes 'Stale' After Jobs, Inflation Data

So much has happened since the last Federal Open Markeﷺts Committee meeting.

The moon 澳洲幸运5开奖号码历史查询:eclipsed the sun, a major 澳洲幸运5开奖号码历史查询:bridge collapsed, the government 澳洲幸运5开奖号码历史查询:(momentarily) shut down and Beyoncé released a new album.

Joking aside, 澳洲幸运5开奖号码历史查询:strong labor markets and 澳洲幸运5开奖号码历史查询:still-hot inflation have likely changed the way some Fed officials think since their last meeting—especially if their comments in the 澳洲幸运5开奖号码历史查询:intervening days are any indication.

That's why the minutes of the March FOMC meeting weren't very helpful when they were released today, according to one economist.

"The minutes from the March meeting of the Federal Open Market Committee are stale and provide no guidance on the central bank’s assessment of the appropriate time to begin normalizing interest rates," wrote Ryan Sweet, chief U.S. economist for Oxford Economics. "...Given the recent data and Fed rhetoric, it is safe to assume that at least one (member) has jumped ship on three rate cuts this year."

Consumers Are Uniquely Absorbing Inflation, One Researcher Says

The cost of living is up, and although prices at the grocery store have gone up, the number of items sold hasn't yet declined significantly, according to Erin Lash, director of consumer sector equity research for Morningstar Research Services.

"We have seen the consumer prove fairly resilient in that regard, and that's been very unique against the backdrop that the prices have been going up across the grocery store," she said in a phone interview last week. "The fact that the consumers have been absorbing them across these higher prices, across the board, has defied some expectations."

That said, consumers are more deliberate with purchasing, turning t🐼o dollar and discount stores and trading down where possible, Lash said.

Companies have also not been passing along all of the increases they've seen. Commodity prices have risen 30% to 40% over the past couple of years, and consumer companies have swallowed some of that. Instead, they are becoming more efficient and reducing product per package—think 澳洲幸运5开奖号码历史查询:shrinkflation.

For example, Hershey's (HSY) tweaked its packaging to produce resea💃lable bags that stand up on the shelf, allowing retailers to keep more of the product on the shelf and spend less time stocking them, Lash sa𝔍id. It's part of the company's plans to drive growth and lower costs.

-Christiana Sciaudone

Wholesale Inventories Grow In Line With Expectations

Warehouse inventories 澳洲幸运5开奖号码历史查询:rebounded from its dꦓecline last month𓆏 in February to grow 0.5%, in line with Census Bureau forecasts.

The wholesale inventory report showed there was $901.1 billion in warehouse goods and merchandise in February, with total inventories lower by 1.5% when compared with last year. 

Inventories of 澳洲幸运5开奖号码历史查询:durable goods were higher on the month, with machinery, lumber and automotive stocks showing the most growth. Farm product and petroleum inventories fell in February. Declining slightly from the previous month, the inventory-to-sales ꦡratio of 1.34 indicat♐ed that wholesalers were able to move products more quickly in February.

-Terry Lane

Economists Discuss Federal Reserve, Markets and the Election in Light of New Inflation Information

Economists had a lot to say about inflation after the Consum🍷er Price Index report on Wednesday.

Inflation was hotter than economists' consensus expectations for the third month in a row. Economists touched on everything from how the Federal Reserve and markets will digest the data to how this plays into an election year.

Here we have rounded up some comments:

We will continue to update this post throughout the day as commentary is rel🐠eased.

Stocks Take a Dive in the Wake of Inflation Report

🎀 Stock futures dropped and Treasury yields jumped on the inflation numbers.

The S&P 500 fell 1.34%, the Dow fell 1.17% and the Nasdaq fell 1.45%. Treasury yields and the dollar jumped following the inflation data, with the 10-year yield hittꦅing a year-to-date high o🃏f more than 4.5%.

Traders' hopes of a rate cut in June also tumbled. There was a 57.4% chance priced in yesterday, but that has fallen to 22.7% in the wake of the Consumer Price Index report, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data.

Inflation Surprised Economists Once Again By Coming in Hotter Than Expected

Inflation grew 3.5% over the 12 months ending in Mar꧂ch, according to new Consumer Price Index (CPI) data released Wednesday.

The CPI, a measure of the cost of living released by the Bureau of Labor Statistics, showed price increases accelerated from the 3.2% annual inflation rate in February, but remained the same at 0.4% on the monthly measure. Economists expected prices had risen 0.3% since February, according to a survey of economists polled by the Dow Jones Newswires and the Wall Street Journal.

Gas prices rose faster than they usually do this time of year, economists said, pushing those numbers higher. "Core" inflation, which excludes volatile gas and food prices, was up 0.4%. This measure was also higher than economists expected and on par with the prior month.

Economists and financial markets are especially scrutinizing inflation measures as they heavily influence the Federal Reserve's next moves on interest rates.

Officials at the Fed are preparing to cut the 澳洲幸运5开奖号码历史查询:fed funds rate, but have said they will do so only when they’re confident inflation is under control. Therefore the quicker inflation falls, the greater the chances of reduced interest rates on mortgages and credit cards, all of which now have♑ꦛ interest rates close to their highest in decades. 

However, inflation so far this year has proved to be rocky and officials 澳洲幸运5开奖号码历史查询:are now diverging on wh🌠ether this price growth is temporary or if it will throw their rate cut projections for the year off course.

Surprisingly high inflation could delay rate cuts, or even prompt the Fed to raise its interest rate even higher than its current 23-year high—a possibility that had been considered off the table until Federal Reserve governor Michelle Bowman꧅ brought it up Friday in a speech. 

Mortgage Applications Increase Even as Rates Move Higher

After decreasing for the past 🃏three weeks, demand for mortgages edged higher this week, even as mortgage rates moved higher.

According to Mortgage Bankers Association data, mortgage loan application volume 💃increased by 0.1% for the week ending April 5.

The average interest rates on 30-year fixed mortgages jumped to 7.01%, hitting their highest level in more than a month. The MBA report noted 澳洲幸运5开奖号码ღ历史查询:recent commentaryไ from Federal Reserve officials has rais🦂ed questions about the timing of interest r🔯ate cuts.

“Mortgage rates moved higher last week as several Federal Reserve officials reiterated a patient posture on rate cuts. Inflation remains stubbornly above the Fed’s target, and the broader economy continues to show resiliency🍸,” said Joel Kan, MBA vice president and deputy chief economist.

Application volumes for mortgage refinancing were 10% higher 澳洲幸运5开奖号码历史查询:compared with the week prior and above the same period from last year, showing a momentary uptick in refinancing activity after 澳洲幸运5开奖号码历史查询:plummeting amid dꩲecades-🔯high mortgage rates. 

Mortgage applications for home purchases declined 5%, with the report showing that the average home purchase 🃏loan was $449,400. 

-Terry Lane