Emmanuel Ochayi
An economic report has indicated that consumer prices in the US maintained their upward trajectory in September, primarily driven by surging housing and petrol costs, keeping inflation at a steady 3.7% for both August and September.
The Federal Reserve is now deliberating on the necessity of further interest rate hikes to curb this price growth.
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“The bigger picture is that the trend is still quite encouraging but the fight continues,” noted Olu Sonola, head of US economics at Fitch Ratings. However, the situation remains complex, with limited clarity on the Federal Reserve’s next steps.
While annual inflation remains consistent, the rate of increase eased from 0.6% to 0.4% between August and September. Housing played a pivotal role in this surge, contributing to the Consumer Price Index.
Petrol prices continued their climb, albeit at a slower pace, while used cars and clothing experienced price drops. Grocery price hikes also moderated.
The Federal Reserve has already enacted substantial interest rate hikes, with the key interest rate currently at over 5.25%. This has affected the public, leading to higher mortgage rates and pricier business loans.
The Fed’s objective is to encourage savings and limit economic expansion to alleviate inflation, but despite a notable decrease from last year’s 9% inflation, the current rate remains above their 2% target.
Officials anticipate that rates will persist at relatively high levels, mainly due to robust job growth and spending. Nevertheless, they hold optimism about taming inflation without causing a severe economic downturn. The central question lingers – can the Federal Reserve navigate this challenging economic landscape while keeping inflation in check?
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
