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The auto insurance inflation rate is up 17% in the past year, according to the May consumer price index.
Meanwhile, the average price for new vehicles has been declining. Pricing in the used vehicle market is poised to soon do the same, economists said.
Auto insurers have raised premiums amid a higher frequency of crashes and repair costs during the pandemic era.

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More wrecks, fewer shops mean higher premiums

Average motor vehicle insurance prices rose by 17.1% in May versus a year ago, according to the consumer price index.
That’s among the largest annual increases of any consumer good or service, bested only by prices for margarine, frozen vegetables, motor vehicle repair and meals at schools and employee sites, according to CPI data.

Prices were up 2% alone between April and May.
About a third (31%) of U.S. auto insurance customers say they experienced a rate increase during the past year, according to a recent study by J.D. Power.

The average consumer pays $2,014 a year in premiums for “full coverage” auto insurance, or nearly 3% of their income, according to a 2023 Bankrate study. (These policies generally include liability and collision coverage.)
Many factors have conspired to push up the cost of car repairs, which ultimately feeds through to insurance prices, economists said.
For one, many auto body shops and auto maintenance companies went out of business during the pandemic, which has reduced their supply and driven up repair costs, said Mark Zandi, chief economist of Moody’s Analytics.
“The pandemic has been really disruptive to the auto repair business,” he said.

Car wrecks also surged in 2022.
Deaths from car crashes in the first quarter of 2022 were the highest in two decades, according to the U.S. Department of Transportation. That dynamic puts financial pressure on insurers that receive an influx of insurance claims for car damage.
Auto insurers lost 12 cents on each dollar of customer premiums paid in 2022, on average, according to J.D. Power — the worst showing in more than 20 years.
That left insurers few options but to raise premiums, J.D. Power said. Customer satisfaction then plummeted, falling at its most rapid pace in two decades, it added.
“They’ve really juiced up those premiums,” Zandi said. “At some point — and I think we’re getting there — people are going to balk.”

Vehicle prices moderate after pandemic-era surge

Further, vehicle prices began rising at a rapid clip in the first half of 2021. Those high prices generally translate to elevated costs for a repair (and, ultimately, for insurers), economists said.
Indeed, new and used vehicles were among the first consumer goods to see high inflation that eventually took hold across the U.S. economy (and which now seems to be in retreat).

A “perfect storm” of pandemic-era factors like snarled supply chains and a shortage of auto parts like semiconductors ran headlong into ballooning consumer demand, said Charlie Chesbrough, senior economist at Cox Automotive.
The pace of vehicle sales in March, April and May 2021 was at its highest since the Great Recession, Chesbrough said. The U.S. Federal Reserve had cut borrowing costs to near zero in early 2020, and consumers built up a cash stockpile during the pandemic by staying home and via government relief.
In other words, a ton of consumers wanted to buy cars that were in short supply, driving up prices.
Now, however, the dynamic has somewhat shifted.

They’ve really juiced up those premiums. At some point — and I think we’re getting there — people are going to balk.

Mark Zandi
chief economist of Moody’s Analytics

To that point, car inventory has partially recovered.
The Fed has raised interest rates aggressively to tamp down inflation, raising borrowing costs and crimping demand, Chesbrough said. Amid those higher rates, manufacturers are using more financial incentives to reduce transaction costs and juice consumer demand, he added.
New vehicle prices have declined for two consecutive months, in April and May, according to the CPI. While falling, they remain 4.7% higher than a year ago.
CPI data indicate that used car and truck prices increased in April and May, but economists think they are poised for an imminent decline. Wholesale used-vehicle prices have fallen by about 6% since March, according to the Manheim Used Vehicle Value Index.
Used car and truck prices are down about 4% in the past year, according to CPI data. More

Bitcoin is up 50% so far in 2023, beating major commodities and stock indexes.
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Asset management giant BlackRock took the first steps Thursday to launch a spot bitcoin exchange-traded fund, which has long been a point of contention between crypto advocates and federal regulators.
The firm filed an application with the U.S. Securities and Exchange Commission to launch the iShares Bitcoin Trust. If approved, the ETF would allow easy access for investors to get exposure to crypto in a product from one of Wall Street’s largest companies.

“The Shares are intended to constitute a simple means of making an investment similar to an investment in bitcoin rather than by acquiring, holding and trading bitcoin directly on a peer-to-peer or other basis or via a digital asset exchange,” the filing said.
The SEC has so far resisted allowing the launch of a spot bitcoin ETF in the U.S. The regulator is currently in a legal battle with Grayscale over whether the firm will be allowed to convert its Grayscale Bitcoin Trust into an ETF. A decision in that case is expected later this year.
Several other firms have filed and later pulled applications to launch spot bitcoin funds. If the SEC relents, there could be a flood of those products on the market.
ETFs typically take months to launch after an initial filing, if they ever begin trading. The proposed BlackRock fund will likely face heavy resistance from the SEC, and the filing could be pulled before an ETF is ever launched, said Aisha Hunt, principal at asset management law firm Kelley Hunt & Charles.
BlackRock’s move comes during a time when crypto prices remain well below their all-time highs and the industry faces increasing scrutiny in Washington, D.C.

The SEC recently sued Coinbase and Binance for allegedly running unregistered securities exchanges. The SEC also accused Binance of commingling customer funds with its own.
Coinbase is listed as the bitcoin custodian for the proposed BlackRock ETF. BlackRock has an existing strategic partnership with Coinbase. The companies announced last year that Aladdin, BlackRock’s institutional investment platform, would be connected to Coinbase Prime for crypto trading and custody.
The SEC did not immediately respond to CNBC’s request for comment on the new filing.
The entrance of BlackRock into the bitcoin ETF space could be a boost to a sector that has had a rocky start over the past two years.
Bitcoin futures ETFs first launched in 2021, but the ProShares Bitcoin Strategy ETF (BITO) is the only one that has grown to a substantial size, with about $800 million in assets. The fund has lost more than 40% on a total return basis since the launch, according to FactSet. The price of bitcoin hit an all-time high shortly after BITO launched and is down more than 60% since its peak.

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The largest bitcoin futures ETF has delivered a negative return since launching in 2021. More

FA Playbook

The Federal Reserve on Wednesday announced a break from raising interest rates after 10 consecutive hikes.
However, the central bank projects that another two quarter-point hikes will come before year-end.
Here’s how the policy shift may affect investors’ bond portfolios, according to advisors.

Couple talking to financial advisor at home
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Consider when to increase bond duration 

While it’s difficult to predict future interest rate cuts, Kyle Newell, a certified financial planner and owner of Newell Wealth Management in Orlando, Florida, said he has started shifting bond allocations. 
When building a bond portfolio, advisors consider so-called duration, which measures a bond’s sensitivity to interest rate changes. Expressed in years, duration factors in the coupon, time to maturity and yield paid through the term. 

As interest rates rose in 2022, many advisors opted for shorter-duration bonds to protect portfolios from interest rate risk. But allocations may shift, depending on future Fed policy.
“I don’t want to get too aggressive with increasing duration,” said Newell. “Because clients with bonds typically are more conservative, and it’s really about protecting principal.” 

Look for ‘areas of opportunity’

As policy shifts, advisors are also looking for ways to optimize allocations amid continued economic uncertainty.
“There are still areas of opportunity in the bond market that are very attractive based on how poorly bonds performed last year,” such as corporate bonds trading at a discount, below “par,” or face value, said Ashton Lawrence, a CFP and director at Mariner Wealth Advisors in Greenville, South Carolina.

“We’re always looking to find a sale or discount,” Lawrence said, noting that high-quality discount bonds have built-in growth as long as the assets don’t default. “You’re capturing that appreciation while you’re getting paid along the way,” he said.
Of course, every investor has different needs, Lawrence said. “But there are definitely some areas of opportunity within the fixed income field.” More

A full-time worker in the U.S. needs to make $28.58 an hour, on average, to afford a modest two-bedroom apartment in their area.
More than a third of U.S. households are renters.
For over a decade, the federal minimum wage has been stuck at $7.25.

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Rent prices in the U.S. are now out of reach for many low-wage earners.
A full-time worker in the U.S. needs to make $28.58 an hour, on average, to afford the rent on a modest two-bedroom apartment in their area. In California, Hawaii, Massachusetts and New York, full-time workers must earn more than $40 an hour to do so.

They’d have to be paid $61.31 an hour in San Francisco to afford a two-bedroom apartment rental, and $50.67 an hour in Boston, according to a new report by the National Low Income Housing Coalition.
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In no state, county or city in the U.S. can a full-time worker earning the local minimum wage come up with the costs for a two-bedroom apartment, the NLIHC writes.
More than a third of U.S. households are renters.
“This is a problem,” said Andrew Aurand, senior vice president of research at the NLIHC. “Research shows that families struggling to pay their housing costs sacrifice other necessities like food, health care and educational needs.”

Wages haven’t kept up with rising rents

To understand how unattainable rents have become for many workers, experts point to the slow growth of the minimum wage across the country.
For over a decade, the federal minimum wage has been stuck at $7.25, and several states, including Texas, Indiana and Idaho, haven’t passed laws raising that number.
Even for workers in states and cities where the minimum wage is double the national figure, rents remain unaffordable. For example, the minimum wage in Washington state is $15.74. Yet, to afford a two-bedroom apartment there, a full-time worker needs to earn over $36.33 an hour, the NLIHC found.

Dan Rose, an organizer with Housing Justice Now in Winston-Salem, North Carolina, said he recently worked with tenants who were being forced to leave a complex with some of the last affordable housing in the area.
When those tenants looked at the costs of rentals elsewhere, Rose said, “they were not able to find any decent two-bedroom units.”
“Overall, we see renters here barely treading water or drowning,” he said. More

The Federal Reserve held interest rates steady at the end of its two-day policy meeting.
The central bank has raised its benchmark borrowing rate 10 times since March 2022, the fastest pace of tightening since the early 1980s.
For consumers, a pause doesn’t offer much relief from record-high borrowing costs.

After more than a year of steady rate hikes, the Federal Reserve held its target federal funds rate steady Wednesday.
For households, however, that offers little relief from record-high borrowing costs.

“It’s not like rates will go down,” said Tomas Philipson, University of Chicago economist and a former chair of the White House Council of Economic Advisers.
In fact, borrowing costs are likely to climb higher in the second half of the year: Fed officials projected another two quarter percentage point moves are on the way before the end of 2023.
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Since March 2022, the central bank has hiked its benchmark rate 10 consecutive times to a targeted range of 5%-5.25%, the fastest pace of tightening since the early 1980s. Inflation has started to cool but still remains well above the Fed’s 2% target.
At the same time, borrowers are paying more on credit cards, student loans and other types of debt.

What the federal funds rate means for you

Wage growth hasn’t been able to keep pace with higher prices for many Americans. As a result, most households are getting squeezed and are going into debt just when borrowing rates reach record highs, Philipson said.
“They are getting hammered,” he added.

The exterior of the Marriner S. Eccles Federal Reserve Board Building is seen in Washington, D.C., June 14, 2022.
Sarah Silbiger | Reuters

The federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight.
Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day. The Fed’s current benchmark rate is at its highest since August 2007.
Here’s a breakdown of how that affects consumers:

Credit cards

Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. As the federal funds rate rose, the prime rate did, as well, and credit card rates followed suit.
Credit card annual percentage rates are now more than 20%, on average — an all-time high. Further, with most people feeling strained by higher prices, more cardholders carry debt from month to month.

Today’s credit card rates are likely as high as they’ve been in decades.

Matt Schulz
chief credit analyst at LendingTree

For those who carry a balance, there’s not much relief in sight, according to Matt Schulz, chief credit analyst at LendingTree.
“The truth is that today’s credit card rates are likely as high as they’ve been in decades, and they’re probably going to still creep higher in the immediate future, even though the Fed chose not to raise rates this month,” he said.

Home loans

Although 15-year and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.
Rates are now off their recent peak but not by much. The average rate for a 30-year, fixed-rate mortgage currently sits near 6.7%, according to Freddie Mac, down slightly from October’s high but still well above a year ago.

“Mortgage rates decreased after a three-week climb,” said Sam Khater, Freddie Mac’s chief economist. “While elevated rates and other affordability challenges remain, inventory continues to be the biggest obstacle for prospective homebuyers.”
Other home loans are more closely tied to the Fed’s actions. Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. Most ARMs adjust once a year after an initial fixed-rate period. But a HELOC rate adjusts right away. And already, the average rate for a HELOC is up to 8.3%, the highest in 22 years, according to Bankrate.

Auto loans

Even though auto loans are fixed, payments are getting bigger because the prices for all cars are rising along with the interest rates on new loans. So if you are planning to buy a car, you’ll still shell out more in the months ahead.
The average rate on a five-year new car loan is now 6.87%, the highest since 2010, according to Bankrate.
Keeping up with the higher cost has become a challenge, research shows, with more borrowers falling behind on their monthly loan payments.

Student loans

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Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by the Fed’s moves. But as of July, undergraduate students who take out new direct federal student loans will see interest rates rise to 5.50% — up from 4.99% in the 2022-23 academic year and 3.73% in 2021-22.
For now, anyone with existing federal education debt will benefit from rates at 0% until the payment pause ends, which the U.S. Department of Education expects could happen in the fall.
Private student loans tend to have a variable rate tied to the Libor, prime or Treasury bill rates — and that means that those borrowers are already paying more in interest. How much more, however, varies with the benchmark.

Savings accounts

While the Fed has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock bottom during most of the Covid pandemic, are currently up to 0.4%, on average.
Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are now over 5%, the highest since 2008′s financial crisis, according to Bankrate.
Since the Fed skipped a rate hike at this meeting, those deposit rate increases are likely to slow, according to Ken Tumin, founder of DepositAccounts.com.
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Shelter is the largest component of the consumer price index.
The category, therefore, has a big influence on the direction of overall inflation.
Housing trends feed through to the CPI with a substantial lag. Economists think a reversal is essentially guaranteed in the second half of the year.

Richard Newstead | Moment | Getty Images

Housing is perhaps the most consequential category in the consumer price index, a key inflation barometer.
As the largest expense for an average U.S. household, shelter accounts for more than a third of the CPI weighting, the most of any other consumer good or service. That gives housing an outsized influence on the overall direction of inflation data.

Housing inflation has been stubbornly high for months, according to CPI data. But economists think it has peaked and is on the precipice of a reversal.

“I know this with about as high a degree of confidence as one could have,” Mark Zandi, chief economist at Moody’s Analytics, said of falling housing inflation being near at hand.

How ‘shelter’ prices have changed

Price changes in “shelter” were generally muted before the pandemic, economists said.
But Covid-19 warped that dynamic: Housing costs shot up but have slowed and even started to fall in some areas, economists said.
For example, Americans saw rents grow by 4.8% in May from a year earlier, to about $2,048 a month on average nationally, according to Zillow Observed Rent Index data. That’s a significant slowdown from 15.7% growth during the prior year, from May 2021 to May 2022.

CPI isn’t ‘a particularly accurate gauge’ for housing

Here’s the problem: The CPI doesn’t capture those price trends in real time.
It operates with a substantial lag, meaning it can take six months to a year for a decline (or increase) in current housing prices to fully feed through to inflation data, economists said.
“It’s not necessarily a particularly accurate gauge of what’s going on in the housing market right now,” Andrew Hunter, deputy chief U.S. economist at Capital Economics, previously told CNBC.
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Here’s the reason for the lag: The U.S. Bureau of Labor Statistics collects rent data from sample households every six months. The BLS also divides these sample households into six different subgroups (called “panels”) and staggers when it collects data for each. Per the BLS, rents for Panel 1 are collected in January and July; Panel 2, in February and August, and so on.
That means it can take a year or so to collect data from all the subgroups.

Why economists think housing inflation is poised to fall

“Shelter is still playing a big role in inflation but that should be slowing in the second half of the year,” Jason Furman, an economist at Harvard University and former chair of the White House Council of Economic Advisers during the Obama administration, wrote Tuesday on Twitter.
The latest CPI reading, issued Tuesday, showed a monthly increase in shelter inflation, to 0.6% in May from 0.4% in April. The most recent figure is on par with the monthly figure notched a year earlier, in May 2022.

But a decline in CPI housing inflation is “almost as much of a certainty as you can get, really,” Hunter said.
There’s an additional measurement quirk relative to housing inflation: The BLS tries to assess price changes for homeowners as well as renters, in a subcategory called “owners’ equivalent rent.”
The measure is essentially a survey that reflects the price homeowners believe they could get if they were to rent their home.
While somewhat tied to market rents, homeowners aren’t necessarily feeling those inflationary pressures — especially those who have a fixed mortgage (meaning their monthly payment doesn’t change) or own their home (meaning they don’t have a housing payment), Zandi said. More

New government data for May shows inflation is cooling.
For Social Security beneficiaries, that may be bittersweet news, because though some prices may come down, their cost-of-living adjustment next year may be lower.

Djordje Krstic | Istock | Getty Images

New government data shows the annual rate of inflation dipped to the lowest level in about two years as of May.
But that may be bittersweet news for Social Security beneficiaries, as they may receive a much lower cost-of-living adjustment in 2024 than they did this year.

The Social Security COLA could be 2.7% in 2024 based on the latest consumer price index data, according to The Senior Citizens League, a nonpartisan senior group.
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That would be substantially lower than the record 8.7% COLA Social Security beneficiaries saw this year, the highest increase in four decades due to record high inflation.
The CPI rose 4% from a year ago as of May, the U.S. Department of Labor said Tuesday, and 0.1% for the month.
The subset of the index used to determine next year’s cost-of-living adjustment, the consumer price index for urban wage earners and clerical workers, or CPI-W, was up 3.6% year over year — the lowest level since March 2021, The Senior Citizens League noted.

To be sure, the latest estimate for the 2024 COLA is subject to change, and could even point to a lower benefit increase for next year as inflation continues to subside, noted Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League.
The Social Security Administration calculates the annual COLA by determining the percentage change in the CPI-W from the third quarter of last year to the third quarter of the current year. If there is no increase, there is no COLA.
Over the past 10 years, the average Social Security COLA was 2.6%, according to Johnson.

Some prices still high, despite inflation cooling

Even though inflation is cooling, prices are still high despite the rate of price increases slowing, Johnson said.
Some categories, like insurance and health-care costs, rarely decline, she noted.
“The fact that we’re even forecasting a COLA at all means prices are higher than they would be a year ago,” Johnson said.
“That part of it is still very problematic for retirees and disabled Social Security beneficiaries who are living on fixed incomes,” she said.

The fact that we’re even forecasting a COLA at all means prices are higher than they would be a year ago.

Mary Johnson
Social Security and Medicare policy analyst at The Senior Citizens League

The record 8.7% COLA for 2023 was expected to give beneficiaries more than $140 more per month starting in January, according to the Social Security Administration.
Richard Fiesta, executive director of the Alliance for Retired Americans, said this year’s benefit boost has had a “mitigating effect” for retirees.
New $35 per month caps on insulin for Medicare beneficiaries starting in January, put into effect by the Inflation Reduction Act, have also helped, he said.
“We are definitely seeing from our members that that is having an immediate and positive effect on their pocketbooks,” Fiesta said.

Longer term, both The Senior Citizens League and the Alliance for Retired Americans, as well as other groups, hope the measure for the annual COLA can be changed to the consumer price index for the elderly, or CPI-E.
The measure would more accurately reflect the categories retirees spend their money on, Fiesta said, such as health care, food and fuel.
Democratic Social Security reform proposals have included that change. However, not all experts are convinced the CPI-E would be a better COLA measure. More

The consumer price index rose at a 4% annual pace in May, the lowest reading in over two years, the U.S. Bureau of Labor Statistics said in its latest inflation report.
So-called “core CPI,” which strips out volatile energy and food prices, has remained stubbornly high, however. That’s a concern for economists.
Categories such as shelter, motor vehicle insurance, recreation, household furnishings and operations, and new vehicles are among those with notable annual increases, the bureau said.
Some categories, such as airline fares, car and truck rentals, citrus fruits, fresh whole milk, and used cars and trucks, deflated over the past year.

People shop at Lincoln Market on June 12, 2023 in the Prospect Lefferts Gardens neighborhood in the Brooklyn borough of New York City.
Michael M. Santiago | Getty Images News | Getty Images

Inflation slowed in May to the lowest rate in two years, largely on the back of declining prices for energy such as gasoline and electricity, the U.S. Bureau of Labor Statistics said Tuesday. But some areas of household budgets haven’t seen much improvement in recent months, a potential concern.
Inflation measures how quickly prices are changing across the U.S. economy.

The consumer price index increased 4% in May relative to a year earlier, a slowdown from 4.9% in April.
The CPI is a key barometer of inflation, measuring prices of anything from fruits and vegetables to haircuts and concert tickets.

Where consumers saw inflation, deflation in May

Consumers saw gasoline prices decline 5.6% between April and May, according to the CPI report.
Prices have fallen dramatically from a spike in the first half of 2022 that was a result of Russia’s invasion of Ukraine. Prices at the pump are down 20% in the past year.
“Energy prices at this time last year were just absurd,” Leer said.
Grocery prices rose slightly from April to May after declining during the two months prior. The “food at home” index is up 6% in the past year.

But food and energy prices can be volatile. That’s why economists use a measure that strips out such categories to get a better sense of inflation’s trajectory going forward. The measure — so-called “core CPI” — has somewhat plateaued since the fall.
“The progress on core inflation has stalled out in recent months,” said Greg McBride, chief financial analyst at Bankrate.
Housing is the biggest expense for the average consumer. Shelter costs were the largest contributor to core CPI in May, according to the Bureau of Labor Statistics.
Shelter prices rose 0.6% in May, up from 0.4% in April. They’re up 8% in the past year. However, economists expect housing prices to start falling in the second half of the year.

Monthly prices for used cars and trucks, motor vehicle insurance, apparel, personal care and education also increased notably in May, the BLS said.
When measuring increases over the past year, notable categories include motor vehicle insurance, which saw prices jump by 17.1%, recreation (4.5%), household furnishings and operations (4.2%), and new vehicles (4.7%).

Aside from energy, many consumer categories also deflated from April to May, including airline fares, communication, new vehicles and recreation, according to the BLS. The monthly 0.6% decline in household furnishings and operations was the category’s first decline since June 2021 and the largest since August 2009.
Over the past year, there was deflation in categories such as airline fares, car and truck rentals, citrus fruits, fresh whole milk, and used cars and trucks.

Why inflation surged in the pandemic era

Inflation during the pandemic era has been a “complicated phenomenon” stemming from “multiple sources and complex dynamic interactions,” according to a recent paper co-authored by Ben Bernanke, former chair of the U.S. Federal Reserve, and Olivier Blanchard, senior fellow at the Peterson Institute for International Economics.
Consumer prices began rising rapidly in early 2021 as the U.S. economy reopened after its Covid-induced shutdown. Americans unleashed a flurry of pent-up demand for dining out, entertainment and vacations, aided by savings amassed from government relief, months of curbed spending and rock-bottom borrowing costs.
Meanwhile, the rapid economic restart snarled global supply chains. That dynamic was exacerbated by Russia’s invasion of Ukraine, which also fueled higher prices for food, energy and other commodities.

Fed policy acts with a lag, one that impacts different sectors of the economy in different ways and at different times.

Greg McBride
chief financial analyst at Bankrate

In other words, supply couldn’t keep up with consumers’ willingness to spend.
Inflation, which increased in economies around the world during the Covid-19 pandemic era, was initially siloed in categories of physical goods such as used cars and trucks.
But the dynamic has somewhat changed. Now, the labor market appears to be playing a bigger role than a shortage of physical goods, economists said.
As the economy reopened after the pandemic, businesses rushed to hire workers, and job openings surged to record highs. That demand tilted the job market in favor of workers, who had ample opportunities. They saw wages grow at their fastest pace in decades as employers competed to hire them.

That strong wage growth has nudged employers, especially labor-intensive service businesses, to raise prices to help compensate for higher labor costs, economists said.
There are signs that labor dynamic is easing, though — which should put downward pressure on overall inflation.
The Federal Reserve has been raising borrowing costs aggressively since early 2022 to rein in demand among consumers and businesses, and ultimately bring inflation back to its 2% annual target. Fed officials are meeting this week and are expected to announce a pause in their campaign to raise interest rates, at least for the time being.
“Fed policy acts with a lag, one that impacts different sectors of the economy in different ways and at different times,” said McBride.
Leaving interest rates unchanged would allow officials to evaluate the cumulative effect of policy so far and “see if it is having the desired impact,” he added. More