US Consumer Prices Rise by 5% in March 2023, but Fed Continues to Raise Interest Rates to Combat Inflation
Consumer prices in the United States rose by 5% in March 2023, according to data from the Labor Department, marking the smallest increase in almost two years. The rise is down from 6% in February and a 40-year high of 9.1% last June. However, core inflation, which excludes food and energy prices, rose by 0.4% in March from February levels, matching expectations. As predicted, the yearly core inflation rate increased slightly to 5.6%. Despite the overall inflation rate being on a downward trend, it is expected that the Federal Reserve will continue to raise interest rates to combat inflation, despite the potential volatility this could bring to the economy. The Fed increased rates in March by a quarter point to a range of 4.75% to 5%, and has increased interest rates nine consecutive times over the last year. Experts believe that the March report may bolster the Fed’s tentative plan to raise its key interest rate by another quarter percentage point in May, capping 5 points of rate hikes over the past year. However, with Silicon Valley Bank’s collapse leading banks to restrict lending, Fed officials have said they’ll probably pause at that point assess the effects of the crisis on the economy.
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