Key question before US reveals latest consumer prices: Is inflation cooling enough for the Fed?

WASHINGTON (AP) — An eagerly awaited report Wednesday on consumer prices will show whether inflation is still easing, a trend the Federal Reserve will weigh in deciding when and by how much — or even whether — to cut interest rates this year.

The March inflation figures are expected to show an ever-so-slight cooling of inflation, which might keep the Fed on track to cut its benchmark rate three times this year, starting as early as June. But with inflation data having come in higher than expected in January and February, a third elevated reading could scramble the Fed’s plans and forestall some or all of those rate reductions.

The government’s inflation reports have assumed an unusually high profile this year in both the financial markets and the presidential election. Chair Jerome Powell has made clear that the Fed needs “greater confidence” that inflation is steadily falling back to the central bank’s 2% target before it can begin reducing borrowing costs.

Republican critics of President Joe Biden have sought to pin the blame for high prices on the president and use it as a cudgel to derail his re-election bid. Despite a healthy job market, a near-record-high stock market and a significant drop in inflation from its peak of 9.1%, many Americans blame Biden for the surge in consumer prices that began in 2021. Average prices are still far above where they stood before the pandemic.

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