Inflation in the US is heating up, what will the Fed do?

On August 10, the US Department of Labor announced data showing that consumer price inflation in the country increased again in July, after about a year of cooling down.

US consumer price inflation heats up again. (Source: Twitter)

The consumer price index (CPI) in July increased 3.2% year-on-year, after increasing 3% in June.

Housing prices were the biggest contributor to the increase in inflation, accounting for more than 90%. Excluding volatile food and energy prices, core CPI rose 4.7% in July from a year earlier.

Since early 2022, the US Federal Reserve (Fed, the US central bank) has been raising interest rates to curb inflation. Last month's hike brought US interest rates to their highest level since 2001.

In the context of the world's largest economy showing signs of cooling down, Fed officials said that it will depend on specific data when considering making further interest rate decisions, ensuring a balance between reducing inflation and avoiding pushing the economy into recession.

Recently, Fed Governor Michelle Bowman said that the bank may need to continue raising interest rates to cool inflation.

The official supported a 25 basis point rate hike at last month's meeting and said further increases may be needed to bring inflation back to the 2% target.

Source: https://baoquocte.vn/lam-phat-tai-my-tang-nhiet-fed-se-lam-gi-237972.html