Inflation in the US is showing signs of cooling down as consumer prices recorded their slowest growth in more than two years, while wage growth also cooled down during the last quarter, as Yahoo Finance reveals. Such developments suggest that the Federal Reserve’s efforts to control inflation may achieve a “soft landing” without triggering a recession.
The price index closely monitored by the Fed rose 3% back in June compared to the previous year, down from 3.8% in May but still above the 2% target of the Fed. However, core prices, without taking volatile food and energy costs into account, remained elevated at 4.1% higher than the previous year. The Federal Reserve raised its short-term interest rate to try to overcome inflationary pressures.
Additionally, the wage growth rate slowed in the April-June quarter, indicating that employers felt less pressure to increase pay as the job market cooled. The economy’s resilience, coupled with easing inflation, has boosted consumer confidence and spending. The Fed aims to maintain a balance between a strong economy and controlled inflation and will closely monitor further developments before making any decisions on rate hikes.
Chair Jerome Powell explained as Yahoo Finance quotes:
I would say it is certainly possible that we would raise (rates) again at the September meeting, if the data warranted,
And I would also say it’s possible that we would choose to hold steady at that meeting.
Stay tuned for more news on the American economy!