Unexpectedly stubborn inflation poses difficulties for Fed and Biden

Unexpectedly hot inflation reports for February are further fueling expectations that the Federal Reserve will end up cutting interest rates later than sooner.

This week brought unwelcome news for the Federal Reserve, President Joe Biden, potentially the labor market, and consumers more generally. Headline data from both the consumer price index, which is the most closely watched inflation gauge, and the producer price index, which measures the prices paid by producers, showed inflation ticked up in February.

Inflation tracked by the CPI rose to 3.2% for the year ending in February, the Bureau of Labor Statistics reported Tuesday, an unexpected development. Notably, the Fed wants inflation to run at 2%, and the CPI has had trouble breaking below 3%. CPI inflation has wobbled between 3% and 3.7% since June 2023
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