US Federal Reserve minutes released Wednesday show most policy-makers foresee another interest rate hike by year’s end, as the central bank targets stubbornly high inflation.
Personal Consumption Expenditures price index inflation the Fed’s preferred gauge for price increases hit a peak of 7.2 percent in June 2022 before beginning to fall. It hit a low of 2.2 percent in September 2024 before beginning to increase again, partially driven by US President Donald Trump’s unpredictable economic policies, including the widespread imposition of tariffs on US imports. PCE inflation hit a three-year peak of 3.8 percent in May, and tempered slightly to 3.4 percent by August, the latest month for which data is available.
That stability is due to demographic changes and lower immigration. US households and businesses have been battered by years of high prices since the pandemic, with the Fed unable to achieve its long-term two-percent inflation target for more than half a decade. The Fed has a dual mandate of keeping inflation to its target while ensuring maximum employment.
“Almost all participants assessed that, while inflation risks were tilted to the upside, risks to the labor market had diminished and were now broadly balanced,” the Fed’s meeting minutes said.
The unemployment rate in the United States has been relatively steady over the last year, even as job growth has see-sawed.
