'The fact that the Fed is even considering rate cuts right now is laughable and clearly political'
By WND News ServicesPublished March 12, 2024 at 9:32am
By Will Kessler
Daily Caller News Foundation
Inflation ticked up year-over-year in February to the ire of investors who have consistently had to push back their expectations of an interest rate cut from the Federal Reserve, according to the latest Bureau of Labor Statistics (BLS) release on Tuesday.
The consumer price index (CPI), a broad measure of the prices of everyday goods, increased 3.2% on an annual basis in February and 0.4% month-over-month, compared to 3.1% in January year-over-year, according to the BLS.
Core CPI, which excludes the volatile categories of energy and food, remained high, rising 3.8% year-over-year in February, compared to 3.9% in January.
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“We still aren’t trending toward the 2% annual target of the Fed, and it’s not even close,” E.J. Antoni, research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the Daily Caller News Foundation.
“Bank reserves have been trending up for over a year and as long as the Treasury continues its borrowing binge, there’s no sign of things slowing down.
If you annualize the monthly inflation data since June 2022, it’s been clear for a while that we haven’t been trending towards 2.0% but over 3.0%.”
Around 60% of the month-to-month increase was from energy and shelter, which rose 2.3% and 0.4% in February, respectively, according to the BLS.
The index for food remained nearly flat compared to January, with only food away from home rising 0.1%.
In response to high inflation, the Fed has placed its federal funds rate in a range of 5.25% and 5.50%, the highest in 23 years, to cool the economy enough to decelerate inflation toward its target of 2%.
Investors have been pushing back expectations that the Fed will cut rates as inflation continues to remain elevated, with the odds at the end of January being at 58% that the Fed would cut rates in March, which has shifted to now a majority not predicting a rate cut until June, as of March 11, according to CME Group.
Inflation peaked under Biden at 9.1% in June 2022 and has since failed to decelerate below 3% year-over-year, rising 3.4% in December and 3.1% in November.
After disappointing inflation data for January, the Dow Jones Industrial Average had its worst day since March 2023 as investors pushed back their rate cut expectations.
“We’ve arrived there, and there’s no indication we’re going significantly lower anytime soon,” Antoni told the DCNF.
“We’ll continue to see many economic indicators point towards growth, but that’s entirely a product of money creation, not a true expansion of the economy.
The fact that the Fed is even considering rate cuts right now is laughable and clearly political, given their behavior in the years prior to 2020: they were increasing rates despite job growth, economic growth, and inflation all being lower than today.”
The U.S. economy has continued to see above-trend growth in recent quarters, with gross domestic product increasing by 3.3% in the fourth quarter of 2023 and 4.9% in the third quarter.
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