Analysis: As Inflation Accelerates, Fed Chair Walsh May Need to Convince Colleagues That Rate Hikes Aren't Necessarily the Answer

Odaily reported that driven by soaring energy prices due to the Iran situation, U.S. consumer spending increased slightly in April, with the annual inflation rate accelerating to its highest level since 2023. A report released Thursday by the U.S. Bureau of Economic Analysis showed that inflation-adjusted consumer spending rose 0.1% in the previous month, while the PCE price index rose 3.8% year-over-year. The "core PCE index," which excludes food and energy items, rose 3.3% year-over-year.

Another set of data showed that the U.S. economy grew at an annualized rate of 1.6% in the first quarter. This pace is lower than the previous initial estimate, as both inventory investment and consumer spending data were revised downward. These inflation figures may further strengthen calls from a growing number of Federal Reserve officials for the Fed to signal that its next interest rate move might not be a cut. The new Fed Chair, Walsh, may need to work hard to convince his colleagues that raising interest rates is not necessarily the only way to contain inflation expectations. (Jinshi)