The Consumer Price Index (CPI) increased 0.5% in December, bringing the key inflation indicator’s year-over-year increase to 7%, the U.S. Bureau of Labor Statistics (BLS) reported.
The CPI soared to 7% on a year-over-year basis in December, the highest level in almost four decades, the BLS reported Wednesday. Economists surveyed by The Wall Street Journal projected the index would soar past 7.1% in December.
“There’s still a lot of scarcity in the economy. Consumers and businesses are in great financial shape, and they’re willing to pay up for more goods, more services and more labor,” Sarah House, director, and senior economist at Wells Fargo, told the WSJ.
Federal Reserve Chairman Jerome Powell acknowledged Tuesday that high inflation is indeed a serious threat to the U.S. central bank’s goal of helping to get U.S. employees back to work.
He also said the Fed will raise rates higher than initially planned if needed to slow rising prices, according to the Associated Press.
“If we have to raise interest rates more over time, we will,” Powell told the Senate Banking Committee, which is considering his nomination for a second four-year term, the wire service also reports. “High inflation is a severe threat to the achievement of maximum employment.”
Confronted with an economy gripped by recession and high unemployment, the Federal Reserve signaled Wednesday that it expects to keep its key short-term interest rate near zero through 2022.
At the same time, the Fed said it will keep buying about $120 billion in Treasury and mortgage bonds each month to maintain low longer-term borrowing rates in an effort to spur spending and growth.
by Robert Romano The Federal Reserve has dumped an eye-popping $343 billion of U.S. treasuries and mortgage-backed securities since it began its policy normalization program in Sept. 2017. $116 billion of that, or more than a third, has been since Sept. 2018 as the nation’s central bank has…