--- title: What Today's Inflation Report Means for Fed Rate Hikes description: While slightly higher, inflation remains below the Fed's target. What does that mean for interest rates? authors: - name: Taylor Tepper url: https://money.com/author/taylor-tepper-3/ at_money_since: 2013 articles: 168 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Education - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Retirement - Shopping - Taxes social: - https://x.com/TaylorTepper former_staff: true published: '2015-03-24T12:41:46.000Z' modified: '2015-03-24T12:41:46.000Z' section: Economy and Politics tags: - American economy - Federal Reserve - inflation - Janet Yellen - Macroeconomic word_count: 433 canonical: https://money.com/inflation-fed-interest-rates/ type: Article source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![150324_INV_LowInflation](https://img.money.com/2015/03/150324_inv_lowinflation.jpg) U.S. consumer [prices](http://www.bls.gov/cpi/) rebounded slightly from last month's precipitous drop-off, while prices were flat over the past 12 months. The Consumer Price Index increased 0.2% last month as oil stopped its dramatic fall, and was unchanged compared to this time last year, according the the Labor Department. So-called [core inflation](http://data.bls.gov/timeseries/CUUR0000SA0L1E?output_view=pct_12mths), which strips out volatile energy and food prices, rose by 1.7%, still well below the Federal Reserve's 2% target. Prices had fallen the three previous months. While firmer than previous months, these low inflation rates come at a critical time for the Federal Reserve. Investors have received mixed messages from central bank officials and economic data recently. For months, the Fed had reassured Wall Street that it would be patient when it comes to removing its accommodative monetary policy. Last week, though, the Fed dropped the word "patient" from its [statement,](http://www.federalreserve.gov/newsevents/press/monetary/20150318a.htm) implying that interest rates could rise soon—perhaps as early as June. Yet in the same breath, the Fed [lowered](http://www.federalreserve.gov/monetarypolicy/fomcprojtabl20150318.htm) its growth and inflation expectations in the near term and signaled that even if rates are lifted soon, they won't climb as rapidly as previously thought. That caused the stock market to soar. "Just because we removed the word 'patient' from the statement doesn’t mean we are going to be impatient," Yellen [said](http://www.federalreserve.gov/monetarypolicy/fomcpresconf20150318.htm) in a press conference after the statement was released. "Moreover, even after the initial increase in the target funds rate, our policy is likely to remain highly accommodative to support continued progress toward our objectives of maximum employment and 2% inflation." Fed Vice Chair Stanley Fischer [said](http://fortune.com/2015/03/23/rate-hike-this-year-fed-official/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+fortunebrainstormtech+%28Fortune+Brainstorm+Tech%29) yesterday that rates would likely rise this year. The federal funds rate, Fischer said, will be determined by economic conditions, rather than by a predictable path. Competing economic indicators and measurements are complicating the Fed's dual-mandate of price stability and maximum employment. Employers [hired](http://www.nytimes.com/2015/03/07/business/economy/jobs-report-unemployment-february.html) nearly 300,000 workers last month, and the unemployment rate dipped to a [post-recession low](http://data.bls.gov/timeseries/LNS14000000) of 5.5%. Yet wages aren't growing strongly and the strong dollar, while a boon for U.S. tourists traveling abroad, has made U.S. exporters less competitive globally. Low oil prices save hundreds, if not thousands, of dollars for drivers annually, but have weighed heavily on the bottom line of energy companies. The Fed seems to be inclined to raise rates given the improving labor market, but has been hamstrung by a lack of meaningful inflation and consistent wage acceleration. By increasing the cost of borrowing, the Fed runs the risk of slowing down economic activity in the midst of a burgeoning recovery. Will interest rates really rise before economists can see the [whites](http://data.bls.gov/timeseries/LNS14000000) of inflation's eyes? ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/inflation-fed-interest-rates/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Economy and Politics", "item": "https://money.com/economy-and-politics/" }, { "@type": "ListItem", "position": 3, "name": "Inflation", "item": "https://money.com/inflation/" }, { "@type": "ListItem", "position": 4, "name": "What Today's Inflation Report Means for Fed Rate Hikes" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/inflation-fed-interest-rates/#webpage", "url": "https://money.com/inflation-fed-interest-rates/", "name": "What Today's Inflation Report Means for Fed Rate Hikes", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2015-03-24T12:41:46.000Z", "mainEntity": { "@id": "https://money.com/inflation-fed-interest-rates/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/inflation-fed-interest-rates/#breadcrumb" }, "dateModified": "2015-03-24T12:41:46.000Z" }, { "@type": "Article", "headline": "What Today's Inflation Report Means for Fed Rate Hikes", "articleSection": "Economy and Politics", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2015/03/150324_inv_lowinflation.jpg", "width": 3650, "height": 4861, "caption": "150324_INV_LowInflation" } ], "author": [ { "@type": "Person", "name": "Taylor Tepper", "url": "https://money.com/author/taylor-tepper-3/", "@id": "https://money.com/author/taylor-tepper-3/#author", "image": "https://img.money.com/2014/05/14-05-21_bio_author_tepper1.jpg?quality=85&w=190&h=190&crop=1", "email": "ttepper@moneymail.com", "sameAs": [ "https://x.com/TaylorTepper" ] } ], "publisher": "https://money.com/#organization", "datePublished": "2015-03-24T12:41:46.000Z", "description": "While slightly higher, inflation remains below the Fed's target. What does that mean for interest rates?", "abstract": "While slightly higher, inflation remains below the Fed's target. What does that mean for interest rates?", "@id": "https://money.com/inflation-fed-interest-rates/", "inLanguage": "en-US", "dateModified": "2015-03-24T12:41:46.000Z", "wordCount": 433, "keywords": [ "American economy", "Federal Reserve", "inflation", "Janet Yellen", "Macroeconomic" ], "about": [ { "@type": "Thing", "name": "Political economy", "sameAs": [ "https://en.wikipedia.org/wiki/Political_economy" ] }, { "@type": "Thing", "name": "Inflation", "sameAs": [ "https://en.wikipedia.org/wiki/Inflation" ] } ] } ] } ```