Some Fed officials worry inflation remains stubbornly high, minutes show

Federal Reserve officials said during their March policymaking meeting that inflation will likely continue to slow this year, according to minutes released Wednesday, but some still fretted over the possibility that inflation could remain stubbornly high.

Federal Reserve officials said during their March policymaking meeting that inflation will likely continue to slow this year, according to minutes released Wednesday, but some still fretted over the possibility that inflation could remain stubbornly high. Those fears have now worsened, at least on Wall Street, which means that interest rates could remain higher for longer if prices don’t budge. While Fed officials “observed that significant progress had been made over the past year” despite disappointing inflation readings for January and February, some also “noted that the recent increases in inflation had been relatively broad based,” the minutes said. The Fed kept its key interest rate at a two-decade high for the fifth straight meeting last month, at a range of 5.25-5.5%. Fed Chair Jerome Powell has said that policymakers want to see more evidence that inflation is headed toward their 2% goal. But Wednesday’s Consumer Price Index report suggests that getting to that goal will continue to be a turbulent ride. Consumer prices rose 3.5% in March from a year earlier, up considerably from February’s 3.2% and higher than the 3.4% economists were excepting. On a monthly basis, consumer prices jumped 0.4% in March, also above expectations. Surging gas prices and sky-high mortgages and rent were the culprits behind the hotter-than-expected reading.