Author Ann Saphir and Howard Schneider
(Reuters) – New data can indicate tension between double inflation and employment of US federal reserves, as the price pressures remained sticky in January, while consumer consumption slowed more than expected.
The traders held the bets that the Fed would reduce interest rates by a quarter percentage point at their meetings in June and September this year, but analysts noticed that the situation became more complex and could make the policy of a difficult decision in the coming weeks.
Tips on growing growth, together with inflation, are still stuck above the Fed Fed goal, “represents the Fed dilemma … If you add them together, it is equally stagflation,” said Peter Cardillo, the main market economist for Spartan Capital Securitries in New York. “Fed now has a lot of concern.”
Stagflation refers to a combination of slow growth and high inflation that forces creators of policy to potentially choose between cuttings for more, on margin, to support economic growth and jobs, or maintain a firmer monetary policy to ensure the return of inflation to the finish line.
Politics donors have started to point out that opportunity this week.
“The FED could balance the inflation risks of growth of growth,” said President Kansas City Feda Jeffrey Schmid in the comments this week that he recorded what he felt in the risk of inflation and concern that uncertainty about economic prospects could start growth. “There are risks that make our decisions about monetary policy harder.”
Schmid spoke before the information on Friday showing that inflation measured by issues for personal consumption in January slowed the price index, reducing to 2.5% last month with 2.6% in December. The basic bee measure, excluding unstable food and energy prices, fell to 2.6% from 2.9%, showed the bureau for the economic analysis of the Ministry of Trade.
Although improvement, the progress to the Fed goal for 2% was slow in recent months, while concerns have set up that the price of prices can be rebuilt after the tax imports that Trump’s administration intends to impose.
The Fed, also, also noted the recent increase in the expectations of consumer from inflation, something that, if held, would reluctantly facilitate monetary policy for fear of caring for inflation psychology.
The same report on Friday also showed that consumer consumption has unexpectedly fell in January, after a sudden increase in December, as households were set on the goods ahead of the telegraph Tariff Trump administration. A recent decline in consumer confidence may also indicate growth of growth in advance with regard to the reliance of the American economy for household consumption.
