Analysis: Amidst Accelerating Inflation, Fed Chair Walsh May Need to Convince Colleagues that Rate Hikes Are Not Inevitable

Odaily Odaily News: Driven by a surge in energy prices due to the situation in Iran, U.S. consumer spending rose 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 increased by 0.1% last 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.

In other data, the U.S. economy grew at an annualized rate of 1.6% in the first quarter, slower than earlier preliminary estimates due to downward revisions in inventory investment and consumer spending data. These inflation figures are likely to strengthen the calls from a growing number of Federal Reserve officials for the Fed to signal that its next move on interest rates may not be a cut. New Fed Chair Walsh may have to work hard to convince his colleagues that rate hikes are not necessarily required to curb inflation expectations. (Jin Shi)