WASHINGTON—Eighty-eight percent of private economists surveyed by the Wall Street Journal believe the Federal Reserve will raise interest rates two more times this year, and NAFCU Chief Economist and Vice President of Research Curt Long agrees.
"Overall, prices are rising steadily, and recently imposed tariffs will likely add to inflationary pressure," Long said after analyzing new consumer price data. "The [Federal Open Market Committee] is almost certain to raise rates again next month due to the tight labor market and building inflation, and odds also favor another rate hike in December."
The FOMC increased the federal funds target rate by a quarter-point to a range of 1.75 to 2% during its June meeting but refrained from raising rates earlier this month.
Overall consumer prices rose 0.2% in July and accelerated to 2.9% for the 12-month period – the highest since February 2012.
Core Prices Up
Data published by the Bureau of Labor Statistics also show that core prices (excluding food and energy costs) increased 0.2% in July compared to the previous month. Year-over-year core CPI growth rose slightly to 2.3%.
Long, in a NAFCU Macro Data Flash report, highlighted that core inflation growth – which rose 2.3% year-over-year – was the fastest pace in a decade. Shelter costs accounted for nearly 60% of the monthly gains; growth was also supported by higher vehicle prices and a rebound in airline fares.
Energy prices decreased 0.5% in July following a 0.3% decrease in June. From a year ago, energy prices were up 11.9%.
Food prices were up 0.1% in July; year-over-year growth of food prices increased 1.4%.