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December 15, 2018

US inflation accelerates in March 2018

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US inflationThe US inflation accelerates in March with the fastest pace since more than an year, providing the Federal Reserve’s speed in anticipation of a further increase in interest rates over the year. The core consumer price index, excluding unstable food and energy prices, reported an increase of 2.1% in March on an annual basis. For comparison a month earlier, the price increase was 1.8%.

On a monthly basis, the US consumer prices reported a 0.2% growth in March in line with consensus forecasts on the market.

Recent inflation figures clearly show that price pressures are increasing. In addition, last week it became clear that wages are also rising. Recent and higher-than-expected growth in the producer price index was reported.

And while the Federal Reserve states that it will stick to its three-year interest rate plan this year, the economists are feeling more likely to have four key rate hikes, given that wages and inflationary pressures continue to rise rising.

The latest bundle of quarterly forecasts shows that Fed representatives are disbanded in the prospects for the base interest rate in 2018. Seven central bankers expect at least four hikes this year, while eight believe that there will be a maximum of three.

In their forecasts, central bankers also expect the median base interest rate to be at 2.9% at the end of 2019, suggesting three increases in the next year compared to two in previous December forecasts. In addition, they expect the level to reach 3.4% in 2020 compared to 3.1% in December forecasts.

The median estimate for US economic growth this year has risen to 2.7% from 2.5% in December, indicating consumer confidence in the US despite the recent weak readings of retail sales. The estimate for 2019 was increased to 2.4% from 2.1%.

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