Interest Rates: Money Magazine Warns Rising CPI Could Pave the Way for Fed Hike

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Interest Rates: Money Magazine Warns Rising CPI Could Pave the Way for Fed Hike

Many financial forecasters believe that an increase in interest rates in 2016 is inevitable. With the price of gasoline now creeping up again and rents continuing to rise,  in April, U.S. consumer prices recorded the biggest increase in more than three years.

An online update titled, “Gas and Rent Increases Drive Consumer Prices to Biggest Gain in More Than 3 Years,” (Lucia Mutikani / Reuters published by Money magazine,) stated:

The rise in prices in April is likely to be welcomed by Fed officials who last month softened their language on inflation at the end of a regular meeting, noting that it continued to run below target because of “earlier declines in energy prices and falling prices of non-energy imports.”

The Federal Reserve report: Industrial Production and Capacity Utilization – G.17, released May 17, 2016, documented the following:

“Industrial production increased 0.7 percent in April after decreasing in the previous two months. Manufacturing output rose 0.3 percent after declining the same amount in March. The index for utilities jumped 5.8 percent in April, as the demand for electricity and natural gas returned to a more normal level after being suppressed by warmer-than-usual weather in March. Mining production fell 2.3 percent in April, and it has decreased more than 1 1/2 percent per month, on average, over the past eight months. At 104.1 percent of its 2012 average, total industrial production in April was 1.1 percent below its year-earlier level. Capacity utilization for the industrial sector increased 0.5 percentage point in April to 75.4 percent, a rate that is 4.6 percentage points below its long-run (1972–2015) average.”

You can read the full report by the Federal Reserve by following this link: Federal Reserve Statistical Release May 17, 2016