risen<\/a> at the fastest pace since May 2023.<\/p>\nConsumers have started to moderate their spending in the face of resurgent prices, according to Thursday\u2019s data. Spending, once adjusted for inflation, rose just 0.1 percent in April, as incomes flatlined and the savings rate dropped to the lowest level since June 2022.<\/p>\n
The Commerce Department also revised lower its assessment of growth in the first quarter, noting that the economy expanded 1.6 percent on an inflation-adjusted basis compared with its initial estimate of 2 percent.<\/p>\n
The war, which began in late February, has severely disrupted global energy markets, raising the urgency of a deal between President Trump and Iranian officials. No agreement has emerged, however, and renewed hostilities in recent days have dimmed hopes that a crucial shipping pathway, the Strait of Hormuz, will be reopened soon.<\/p>\n
The Fed typically ignores or \u201clooks through\u201d supply shocks because they historically tend to affect prices only temporarily. John C. Williams, president of the Federal Reserve Bank of New York, appeared to back this approach in remarks on Thursday. He acknowledged that continuing supply chain disruptions caused by the war were worrisome, but he estimated that the impact on inflation could peak in a few months.<\/p>\n
But other officials have begun to question whether the look-through approach is the right one, given that the war with Iran is the fourth shock in five years to push inflation further from the Fed\u2019s 2 percent target. The U.S. economy has weathered a series of events that have raised prices, including the Covid-19 pandemic, Russia\u2019s invasion of Ukraine and Mr. Trump\u2019s global trade war.<\/p>\n
Since 2021, inflation has been higher than the central bank would like. Expectations about inflation in the next five or 10 years still reflect confidence that the central bank will eventually succeed in bringing inflation down to 2 percent. But the longer inflation stays above that target, the more likely that confidence could begin to ebb.<\/p>\n
With the labor market on firmer footing than just a couple of months ago, more Fed officials have embraced the possibility that rates may need to rise to get inflation fully under control.<\/p>\n
\u201cI want to be clear about my risk assessment: The risks remain tilted toward \u2060higher inflation,\u201d said Lisa D. Cook, a Fed governor, in remarks on Wednesday. \u201cI am prepared to raise rates, if the expected disinflation does not appear in a timely manner.\u201d<\/p>\n
That followed a speech last week from Christopher J. Waller, another governor, who made clear that he could \u201cno longer rule out rate hikes further down the road if inflation does not abate soon.\u201d That, he added, was \u201cespecially true if measures of inflation expectations, some of which have risen lately, show signs of becoming unanchored.\u201d<\/p>\n
The specter of higher rates comes amid a leadership transition at the Fed. Kevin M. Warsh, whom Mr. Trump picked to replace Jerome H. Powell as chair, was sworn in to the top job at the Fed last week. Mr. Trump has long berated the Fed for not lowering rates quickly enough.<\/p>\n
Mr. Trump has hinted he will try to ease up on his pressure campaign now that Mr. Warsh is at the helm. At Friday\u2019s swearing-in ceremony<\/a>, which was held at the White House for the first time since 1987, the president said he wanted Mr. Warsh to be \u201ctotally independent.\u201d<\/p>\nBut that leeway could quickly disappear, especially if the Fed begins to more seriously consider rate increases, which would make all types of borrowing more expensive.<\/p>\n
Traders in federal funds futures markets expect the central bank to eventually raise rates early next year.<\/p>\n","protected":false},"excerpt":{"rendered":"A measure of inflation closely watched by the Federal Reserve accelerated in April to a three-year high, reinforcing…\n","protected":false},"author":2,"featured_media":246480,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[11290,18536,58382,83081,20601,75,84,83,9,24,63],"class_list":["post-246739","post","type-post","status-publish","format-standard","has-post-thumbnail","category-manhattan","tag-banking-and-financial-institutions","tag-commerce-department","tag-federal-reserve-system","tag-inflation-economics","tag-interest-rates","tag-manhattan","tag-manhattan-headlines","tag-manhattan-news","tag-new-york","tag-new-york-city","tag-nyc"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/246739","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=246739"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/246739\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/246480"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=246739"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=246739"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=246739"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}