Consumer prices rose 3.3% in May compared to a year ago, easing slightly from the previous month and outperforming economists' expectations.decided to hold its benchmark interest rate steady on Wednesday, prolonging an aggressive fight against inflation despite fresh data hours earlier that showed a slight cooldown of price increases.
Inflation has fallen significantly from a peak of 9.1%, but price increases have barely budged in recent months and remain more than a percentage point higher than the Fed's target rate of 2%. "So far, the data has not given us that greater confidence," Fed Chair Jerome Powell said at a press conference in Washington, D.C., last month. "It is likely that gaining such greater confidence will take longer than previously expected."Roger Aliaga-Diaz, chief economist at the investment giant Vanguard, said in a statement to ABC News before the rate announcement that he believed the Fed would keep interest rates at current levels for at least the next six months.
The Fed risks a rebound of inflation if it cuts interest rates too quickly, since stronger consumer demand on top of solid economic activity could lead to an acceleration of price increases. Average hourly wages surged 4.1% over the year ending in May, the report found. That rate of pay increase exceeds the pace of inflation, indicating that the spending power of workers has grown even as prices jump.
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