In a report that came out today, the Federal Reserve’s preferred inflation measure, the personal consumption expenditures price index, rose 0.3% for the month and showed a 2.5% annual rate. This is a slight ease in inflation for January, and it comes as worries continue to grow over the Trump administration’s tariff policies and their impact on the performance of the economy.
These inflation numbers came as expected by the Fed,
and likely will result in the maintaining of current interest rates. Getting
inflation down will continue to be a important goal for the Fed as well as the
Trump administration. It will be very important for the administration to get
inflation under control before the midterm elections. If unable to do so, the
voters may be looking for some change in Congress in 2026.
https://www.cnbc.com/2025/02/28/pce-inflation-january-2025-.html
I think that it will be interesting to watch what measures are taken and how Trumps tariffs will impact inflation. If inflation continues to increase could we see an additional increase in nominal interest rates by the FED? As we have seen in previous elections, the party that fails to tackle inflation is replaced in the following election.
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