Inflation Fell in January But Still Higher Than Expected

(AmericanProsperity.com) – Tuesday, the Bureau of Labor Statistics released data that showed that inflation has decreased in the month of January, but it’s still higher than experts expected it to be.

The falling inflation is good news for the Federal Reserve, which is making plans to implement interest rate cuts this year, but it may not be enough for their plans. Core inflation was said to increase by 3.9% over the year, which matches the cooldown from the previous month.

The Federal Reserve is keeping an eye out for these dropping inflation percentages so that they can make interest rate cuts this year as they’ve planned three of them. However, the slowdown in inflation for January signals a positive sign for the Federal Reserve as their next rate decrease or increase decision meeting will be held in March.

The economy is said to have pushed above expectations by adding over 350,000 jobs last month and still holding the unemployment rate at 3.7%, which is extremely low. The Federal Reserve is just waiting to watch the inflation rates to see if they are able to cut interest rates. However, if they cut them too fast it could lead to an acceleration in prices.

“We’re not looking for a weaker labor market,” Federal Chair Jerome Powell said. “We’re looking for inflation to continue to come down, as it has been coming down for the last six months.” He continued, “We’re not declaring victory at this point. We think we have a ways to go.” Jerome Powell mentioned how it’s good that inflation is dropping and hiring is continuing alongside it, but he did warn about an “economy that runs too hot.”

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