What’s going on:
Policymakers at the central bank received new data on wages and personal consumption ahead of the Federal Open Market Committees (FOMC) May 2-3 meetings. The updated inflation and wage data leads experts to believe that the Federal Reserve will raise interest rates once again.
Movement within interest-rate futures now suggests a 92% chance that the Fed will raise interest rates by a quarter point at its meeting next week, according to Barron’s. The Federal Reserve has already raised rates nine times in just over a year.
The index that measures personal consumption expenditures, which does not include food and energy, experienced a surge of 4.6% over the previous year. This surpasses the anticipated 4.5% predicted by expert economists. This record-breaking spike, which was revised to 4.7% in February, overshoots the Federal Reserve’s 2% target.
Why it matters:
High inflation rates have impacts on areas such as wage growth and job opportunities. The data released on Friday suggests that the Federal Reserve has more to do in terms of controlling inflation rates in the country.
How it’ll impact the future:
The persistently high inflation rate has the potential to reshape the future of work in 2023. The ongoing battle against high inflation may also impact business investments and innovation. As the central bank takes measures to control inflation – such as raising interest rates – borrowing costs for businesses may increase. This could lead to reduced investments in new projects, research and development, and expansion plans for large and small businesses.