ARLINGTON, Va.—Should inflation continue to rise, the Federal Open Market Committee (FOMC) will likely be forced to raise rates two more times this year, according to NAFCU Chief Economist and Vice President of Research Curt Long.
Long was responding to new consumer price data that revealed overall consumer prices rose in June for the third consecutive month.
Overall consumer prices rose 0.1% in June and accelerated to 2.8% for the 12-month period – the highest pace since February 2017.
"Overall, prices are rising steadily and recently imposed tariffs will likely add to inflationary pressure," Long said. The FOMC, the Fed's monetary policy-setting arm, increased the federal funds target rate by a quarter-point to a range of 1.75% to 2% during its June meeting.
Long noted that committee members remain split on whether one or two more rate hikes this year are warranted.
Data published by the Bureau of Labor Statistics also show that core prices (excluding food and energy costs) increased 0.2% in June compared to the previous month. Year-over-year core CPI growth remained at 2.2%, Long noted.
Long, in a NAFCU Macro Data Flash report, said core inflation growth "was supported by higher vehicle prices and a rebound in medical care prices." Apparel prices and costs of lodging away from home declined.
Energy prices decreased 0.3% in June following a 0.9% increase in May, as energy services costs declined as gas prices continued to rise. From a year ago, energy prices were up 11.7%.
Food prices were up 0.2% in June; year-over-year growth of food prices increased 1.4%