Federal Reserve minutes: Some officials highlighted worsening inflation last month

Some Federal Reserve policymakers argued at their most recent meeting in March that inflation was likely worsening, even before the government reported Wednesday that price increases re-accelerated last month

Federal Reserve Minutes (Copyright 2024 The Associated Press. All rights reserved.)

Some Federal Reserve policymakers argued at their most recent meeting in March that inflation was likely worsening, even before the government reported Wednesday that price increases re-accelerated last month.

According to the minutes of the Fed's March 19-20 meeting released Wednesday, all 19 Fed officials generally agreed that high inflation readings in January and February “had not increased their confidence” that inflation was falling steadily to their 2% target.

Many economists had suggested that the outsize price increases in the first two months of the year probably reflected one-time increases that often happen at the start of a year as companies impose annual price increases. But some Fed officials at the March meeting disputed that assessment, and said the higher prices were “relatively broad-based and therefore should not be discounted as merely statistical aberrations."

On Wednesday, that assessment appeared to be confirmed. The government reported that for a third straight month, consumer inflation rose at a pace faster than is consistent with the Fed's target level. Excluding volatile food and energy costs, core prices jumped 0.4% from February to March. Such core prices were 3.8% higher than they were a year earlier.

Wednesday's data figures raised fears that inflation appears, for now, to be stuck above the Fed's 2% target. It has made little progress this year after having steadily dropped in 2023. The leveling-off of inflation makes it less likely that the Fed will implement the three quarter-point rate cuts that the officials had projected after their March meeting.