Inflation is not just back in the news but also in the consciousness of the U.S. public.
It’s not panic, but part of a growing recognition that inflation could again rattle the economy — and have implications for interest rates. Early in February, the combination of anemic economic growth, high inflation, and high unemployment, which is called stagflation started to haunt Wall Street. Short-dated Treasury yields lifted by as much as eight basis points over concerns about interest rates. In the meanwhile, longer-term yields fell over worries about inflation.
In his semiannual congressional testimony, Federal Reserve Chair Jerome Powell found higher inflation dogging him in questions. The Consumer Price Index came out. Although not the Personal Consumption Expenses figures the central bank prefers as an inflation indicator, the CPI showed a year-over-year 3% increase or 0.5% between December 2024 and January 2025. December’s increase was 2.9%. Core inflation over 12 months was even higher at 3.3%; December was 3.2%.
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