- Tyler Durden, Zero Hedge
Finally, there is a pickup in the inflation rate. Weak inflationary pressure has been one of the main concerns for the Fed during the last months. In case Janet Yellen wants to start raising interest rates, she will need a room for a manoeuvre; however, a persistent weakness in consumer prices is suggesting the central bank will keep the stimulus for a longer time.
On Tuesday, Janet Yellen got a relief from a report from the Bureau of Labor Statistics that showed price growth in the world's largest economy continued to remain subdued, though surprising markets to the upside. The core measure of inflation stood at 1.7% on an annual basis in March, accelerating from 1.6% a month earlier and outpacing expectations for no change. On a monthly basis, consumer prices ticked up 0.2%, outpacing analysts' predictions for a 0.1% increase. The broader measure also improved over the same period. The Fed considers the core measure as the headline indicator, as it excludes food and energy prices, which are removed because of their volatility, providing a more accurate view of tangible price growth.
The Fed decided to abandon the unemployment threshold, however, some of the FOMC members suggested linking the guidance to the inflation rate, a measure that will add a quantitative element in the Federal Reserve's statement.
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