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In April, the US inflation rate increased by 0.3%, maintaining a consistent pace from March, according to the Bureau of Economic Analysis.

This trajectory is worrying for the Federal Reserve, suggesting that high inflation could persist longer than anticipated, complicating plans to lower interest rates soon. Over the past 12 months, the Personal Consumption Expenditures (PCE) price index rose by 2.7%, matching economists’ forecasts.

Despite maintaining its benchmark interest rate between 5.25% and 5.50% for the last 10 months, the Federal Reserve faces ongoing inflation and labor market challenges, with recent data showing higher-than-expected figures from January to March. April’s job growth and Consumer Price Index (CPI) data offered slight relief, indicating the lowest employment growth in six months and a slower CPI increase.

Consumer spending, making up over two-thirds of US economic activity, grew by 0.2% in April, down from 0.7% in March, while personal income growth slowed to 0.3%. The Fed has raised borrowing costs by 525 basis points since March 2022 to cool demand, but financial markets have pushed back expectations for the first rate cut from March to September.

Overall, the persistent inflationary pressure suggests that the Federal Reserve may need more time to achieve its 2% target.

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