Fed predicts that inflation will stagnate and will take time to fall to the target

The Federal Reserve The US (Fed) predicted this Wednesday that inflation will remain stable without major changes in the future, which reinforces the forecast – materialized in recent weeks by the economic data of USA– that the reduction in interest rates will take longer than expected.

The organization noted in its Beige Book that the increase in prices has been on average modest, at practically the same rate as that recorded in its last report, from the beginning of March.

“Disturbances in the Red Sea and the collapse of the (Francis Scott) Key Bridge caused some delays in shipments, but so far have not led to a general increase in prices”said that document.

The Beige Book is a publication by the US regulator that analyzes the current economic conditions of the 12 districts into which the Fed divides the country, based on qualitative information collected by each reserve.

The conclusion among its members was that inflation is expected to remain stable. Some members in primarily manufacturing districts, however, perceived a near-term upside risk.

In March, inflation registered an interannual increase of three tenths, up to 3.5%. It was the second consecutive year-on-year increase in prices after they rose one tenth in February.

The president of the FedJerome Powell admitted yesterday that progress towards reaching the 2% target is being slower than expected. And until its organization has confidence that prices are sustainably approaching that goal, it is not considering cuts in interest rates, which have continued since July 2023 in a range of 5.25% to 5.5%, its maximum. level since 2001.

He Beige Book acknowledged that overall economic activity expanded slightly as a whole since late February.

Ten of the 12 districts experienced slight or modest growth (compared to eight in the previous report) and the other two saw no change.

The document added that consumer spending barely increased, although this indicator was diverse between districts and spending categories.

The economic outlook is “cautiously optimistic“, concluded the Beige Bookaccording to which spending in some districts was boosted by improved inventories and incentives for distributors, although sales remained weak in other districts.

Its publication coincides this time with the holding of the spring meetings of the International Monetary Fund in Washington this week (IMF) and the World Bank (WB), within the framework of which the IMF urged central banks to ignore the optimism of those who believe that the fight against inflation is reaching the end of the road.