- Title: 'Three interest rate hikes in 2022,' says economist as consumer prices go up
- Date: 10th December 2021
- Summary: NEW YORK, NEW YORK, UNITED STATES (DECEMBER 10, 2021) (REUTERS) (SOUNDBITE) (English) MIZUHO SECURITIES USA, ASSOCIATE U.S. ECONOMIST, ALEX PELLE, SAYING: "The inflation in the United States is almost twice the rate of European inflation. We're both suffering from the same global supply chain issues, but the United States undertook a much more aggressive, both monetary, arguably, but certainly a much more aggressive fiscal stimulus program, especially the fiscal stimulus that we undertook in 2021, which at this point I think we can say fairly was excessive. So, that is... there is a significant demand component to this inflation. The U.S. consumer wages are rising. The, you know, consumer has a lot of spending power, both from rising wages and from accumulated savings, both from spending less in the pandemic, as well as all the fiscal stimulus that was transferred to the consumer. So, the consumer has a lot of spending power. And that is a serious driver of inflation. And the Fed is still has a very easy policy. So, the combination of fiscal and monetary policy on the demand side is giving this inflationary impulse a significant demand component as well as the supply side, you know, supply chain issue component. But it's not just that. It's also a demand... significantly has a demand factor."
- Embargoed: 24th December 2021 15:19
- Keywords: COVID-19 CPI data Omicron U.S. Federal Reserve consumer prices coronavirus health inflation pandemic
- Location: NEW YORK, NEW YORK, + WASHINGTON, D.C., UNITED STATES, UNKNOWN LOCATIONS
- City: NEW YORK, NEW YORK, + WASHINGTON, D.C., UNITED STATES, UNKNOWN LOCATIONS
- Country: USA
- Topics: Economic Events,Equities Markets,United States
- Reuters ID: LVA00AF7GI1JB
- Aspect Ratio: 16:9
- Story Text: U.S. consumer prices increased further in November as the cost of goods and services rose broadly amid supply constraints, leading to the largest annual gain since 1982, which could encourage the Federal Reserve to quickly wind down its bond purchases.
The consumer price index rose 0.8% last month after surging 0.9% in October, the Labor Department said on Friday (December 10).
In the 12 months through November, the CPI accelerated 6.8%.
That was the biggest year-on-year rise since June 1982 and followed a 6.2% advance in October.
Economists polled by Reuters had forecast the CPI climbing 0.7%.
The report followed on the heels of news last week that the unemployment rate fell to a 21-month low of 4.2% in November.
Tightening labor market conditions were underscored by a report on Thursday showing new applications for unemployment benefits dropped to the lowest level in more than 52-years last week.
Other data this week showed there were 11 million job openings at the end of October and Americans quit jobs at near-record rates. The tight labor market is boosting wages and supply bottlenecks are showing little sign of easing, indicating that high inflation could persist well into 2020.
Fed Chair Jerome Powell has said the U.S. central bank should consider speeding up the winding down of its massive bond purchases at its policy meeting next Tuesday (December 14) and Wednesday (December 15).
Many economists are expecting an early Fed interest rate increase.
Excluding the volatile food and energy components, the CPI rose 0.5% last month after gaining 0.6% in October. The so-called core CPI jumped 4.9% on a year-on-year basis after increasing 4.6% in October.
The Fed tracks the personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, for its flexible 2% target.
The core PCE price index surged 4.1% in the 12 months through October, the most since January 1991. November data will be released later this month.
(Production: Aleksandra Michalska) - Copyright Holder: REUTERS
- Copyright Notice: (c) Copyright Thomson Reuters 2021. Open For Restrictions - http://about.reuters.com/fulllegal.asp
- Usage Terms/Restrictions: None