Inflation Threatens Interest Rate Cuts

22 February 2001

The spectre of inflation loomed large this week as it emerged that the US Consumer Price Index had risen 0.6%.

This figure reflects spiralling energy prices (up 3.9%), but even the core price, which excludes food and energy, jumped by 0.3% – a greater margin than expected.

Inflationary worries may now deter the Federal Reserve from lowering interest rates next month, which may in turn reduce investor confidence.

News source: BBC Online Business News (UK)