It wasn’t a huge drop, but inflation did slow in April.
Consumer prices rose 3.4% in April compared to a year ago, slowing somewhat from the previous month, ABC News reported. The slowing could be interpreted as a good sign for the Federal Reserve, which has been battling a stubborn inflation rate for a few years now.
After falling dramatically over the course of last year – it was 9.2% mid-year — inflation had accelerated in recent months, the Fed to postpone highly anticipated interest rate cuts and leaving borrowing rates high for everything from credit cards to mortgages.
Price increases have slowed significantly from a peak of about 9%, but inflation still stands more than a percentage point higher than the Federal Reserve’s target rate of 2%, according to the ABC report.
The latest finding indicated a mild cooldown from the 3.5% annual inflation rate recorded in March.
Core inflation — a closely watched measure that strips out volatile food and energy prices — increased 3.6% over the year ending in March, slowing slightly from the previous month, the data showed.
With prices remaining elevated, the Fed decided earlier this month to keep interest rates where they are, rather than beginning the hoped-for reduction. It was the sixth straight time rates were held steady. For now, ABC is reporting, the Fed has all but abandoned its previous forecast of three quarter-point rate cuts this year.
At a financial conference in Amsterdam on Tuesday, Fed Chair Jerome Powell said inflation has stayed higher than he thought it would, putting pressure on the central bank to leave its high interest rates in place.
“We did not expect this to be a smooth road,” Powell told attendees at an annual gathering of the Foreign Bankers’ Association. “But these [inflation readings] were higher than I think anybody expected. What that has told us is that we’ll need to be patient and let restrictive policy do its work.”
