If even more business owners become concerned about inflation in the coming months, then that might be a problem for the Federal Reserve — which is trying to tamp down inflation still running well above the central bank’s 2% target, even though price increases have slowed in the past year. The Fed keeps a close eye on inflation expectations to know whether or not US consumers have become used to a certain level of inflation.
9% in the 12 months ended in April. The Bureau of Labor Statistics releases its Consumer Price Index for May later Tuesday. The Fed’s preferred inflation gauge has similarly shown that inflation has cooled in the past several months, though its reading for April showed a surprise uptick. The Fed has raised interest rates 10 times since it began lifting rates in March 2022, and it’s succeeded in bringing down inflation so far without throwing the labor market off a cliff.