Despite a fall in inflation, prices remain high, with a 4.9 hike in April highlighting the challenge of the economic slowdown.
While there has been progress, with inflation easing over the past 10 months, policymakers remain concerned that it could become a permanent threat to workers and families.
It is especially due to tighter credit conditions, rising loan payments, and recession uncertainty.
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Regarding getting prices to settle, some problems have eased, such as last year’s energy surge, which followed Russia’s invasion of Ukraine.
However, new problems are bubbling up, including the recent rise in wholesale used car prices, which are beginning to show up in consumer costs.
Housing costs continue to rise, driven by a rise in rents, which is not expected to ease until the number of homes available increases or until there is a cooling in the housing market.
Now, analysts and policymakers are waiting for those rising costs to show up in consumer prices, which is exactly what is happening.
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This is just one example of what economists believe to be a bumpy path to stabilizing inflation in the US.
However, there are some encouraging spots, as air fares dropped by 2.6 percent in April, while the cost of major grocery staples such as produce, proteins, dairy, and eggs cooled.
The Federal Reserve has been fighting to tame inflation for over a year, aggressively hiking interest rates at the fastest pace in decades.
The aim is to get borrowing costs high enough that consumers pull back on all kinds of spending and investment, shying away from higher mortgage rates, auto loans, or even canceling business growth plans.
The Fed recently raised its benchmark interest rate for the 10th time in 14 months in what could be its final hike for now.
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The job market has remained resilient, with 253,000 new jobs in April.
The unemployment rate dropped to 3.4 percent, matching a low unseen since May 1969.
But there is still a long way to go to stabilize the economy.
However, plans have been complicated by stress in the banking sector, which has become a concern for the stability of the entire financial system.
Since the failures of Silicon Valley Bank and Signature Bank in March, small businesses have felt banks pull back on lending, and stocks at a handful of regional banks are taking a beating.
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