Fed's Powell met with lawmakers on Capitol Hill ahead of June inflation report
Sen. Barrasso: Fed's Powell 'concerned significantly' about inflation
Federal Reserve Chairman Jerome Powell visited Capitol Hill on Tuesday to meet with lawmakers one day before the Labor Department released its closely watched June inflation report, according to Sen. John Barrasso.
The Wyoming Republican told FOX Business' Stuart Varney on Wednesday that he met with Powell the previous day to discuss scorching-hot inflation.
"I met with the Chairman of the Federal Reserve yesterday," Barrasso said, "And he's concerned significantly about inflation, as should be every American. Seems to be more concerned, though, than the administration, which isn't taking any legitimate action to deal with what we're looking at in terms of inflation."
The Labor Department said Wednesday that the consumer price index, a broad measure of the price for everyday goods, including gasoline, groceries and rents, rose 9.1% in June from a year ago. Prices jumped 1.3% in the one-month period from May. Those figures were both far higher than the 8.8% headline figure and 1% monthly gain forecast by Refinitiv economists.
INFLATION SURGES 9.1% IN JUNE, ACCELERATING MORE THAN EXPECTED TO NEW 40-YEAR HIGH
It marks the fastest pace of inflation since December 1981.
So-called core prices, which exclude more volatile measurements of food and energy, climbed 5.9% from the previous year. Core prices also rose 0.7% on a monthly basis – higher than in April and May – suggesting that underlying inflationary pressures remain strong and widespread.
The worse-than-expected inflation report has ramped up pressure on the Federal Reserve to move even more aggressively to catch up with runaway consumer prices. Policymakers already raised the benchmark interest rate by 75 basis points last month for the first time since 1994 and have confirmed that a similarly sized increase is on the table in July.
With inflation running even hotter than economists expected in June, Wall Street is now ramping up the odds of a mega-sized, 100-basis point hike in July. About 38% of traders are now pricing in the chances of a 100-basis point increase later this month, according to the CME Group's FedWatch tool, which tracks trading. Fed officials have not ruled out the possibility.
"Everything is in play," Atlanta Fed President Raphael Bostic told reporters on Wednesday. Asked if that included raising rates by a full percentage point, he said: "It would mean everything."
Still, the Fed is in a precarious situation as it walks the line between cooling consumer demand and bringing inflation closer to its 2% target without inadvertently dragging the economy into a recession. Hiking rates tends to create higher rates on consumer and business loans, which slows the economy by forcing employers to cut back on spending.
Powell has acknowledged the central bank's war on inflation could cause a recession.
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"It’s certainly a possibility," Powell told lawmakers in June. "We are not trying to provoke and do not think we will need to provoke a recession, but we do think it’s absolutely essential that we restore price stability, really for the benefit of the labor market, as much as anything else."