Some Federal Reserve policymakers argued at their most recent meeting in March that inflation was likely worsening, even before the government reported Wednesday that price increases re-accelerated last month.
According to the minutes of the Fed’s March 19-20 meeting released Wednesday, all 19 Fed officials generally agreed that high inflation readings in January and February “had not increased their confidence” that inflation was falling steadily to their 2% target.
Many economists had suggested that the outsize price increases in the first two months of the year probably reflected one-time increases that often happen at the start of a year as companies impose annual price increases. But some Fed officials at the March meeting disputed that assessment, and said the higher prices were “relatively broad-based and therefore should not be discounted as merely statistical aberrations.”
On Wednesday, that assessment appeared to be confirmed. The government reported that for a third straight month, consumer inflation rose at a pace faster than is consistent with the Fed’s target level. Excluding volatile food and energy costs, core prices jumped 0.4% from February to March. Such core prices were 3.8% higher than they were a year earlier.
Wednesday’s data figures raised fears that inflation appears, for now, to be stuck above the Fed’s 2% target. It has made little progress this year after having steadily dropped in 2023. The leveling-off of inflation makes it less likely that the Fed will implement the three quarter-point rate cuts that the officials had projected after their March meeting.