WASHINGTON — A price survey closely watched by the Federal Reserve cooled slightly last month, a sign that inflation may be easing after running high in the first three months of this year.
Friday’s report from the Commerce Department showed that prices, excluding volatile food and energy categories, rose 0.2% from March to April, compared with 0.3% in the previous month. Measured compared to a year earlier, so-called “core prices” rose by 2.8% in April, the same as in March.
Inflation fell sharply in the second half of last year, but then leveled off above the Fed’s 2% target in the first few months of 2024. Now polls show higher rents, groceries and gasoline are angering voters as the presidential campaign intensifies, Donald Trump and his Republican allies have tried to shift the blame to President Joe Biden.
A flurry of recent comments from Fed officials have underscored their intention to keep borrowing costs high for as long as it takes to completely beat inflation. As recently as March, Fed policymakers had collectively forecast three rate cuts this year, starting as early as June. Still, Wall Street traders now expect just one rate cut this year, in November.
An influential Fed official, John Williams, president of the Federal Reserve Bank of New York, said Thursday he expects inflation to cool again in the second half of the year. Until then, however, Fed Chairman Jerome Powell has made it clear that the central bank is willing to keep its key interest rate at 5.3%, the highest level in 23 years.
The central bank raised its benchmark interest rate from near zero to its current 15-month peak, the fastest rise in four decades, to try to curb inflation. The result was significantly higher rates on mortgages, auto loans and other forms of consumer and business loans.
