May 25, 2005
Not Good Macro News
The Financial Times reports:
FT.com / US - US wholesale prices rise 0.6 per cent: Producer prices rose by more than expected last month, with the headline rate rising 0.6 per cent and the core rate excluding food and energy - up 0.3 per cent, the Labor Department reported. Over the past 12 months, the overall PPI rose by 4.8 per cent, just below the March level, while the core rate increased by 2.6 per cent....
Separately, a report released by the Federal Reserve on Tuesday pointed to a surprising drop in industrial activity last month. Industrial production fell by 0.2 per cent in April, compared with the consensus forecast of a 0.2 per cent increase. Capacity utilisation fell slightly to 79.2 per cent....
The Federal Reserve has signalled concern about inflation pressures, and has said it expects to continue raising its target interest. Earlier this month, the Fed tightened by another quarter point, bringing the federal funds rate to 3 per cent. Don Kohn, a Federal Reserve governor, said following a speech yesterday that higher core inflation represented in part the effort by businesses to pass on higher energy costs to their customers. "My best guess is that inflation will remain contained provided we continue to tighten at a measured pace," Mr Kohn said.
Posted by DeLong at May 25, 2005 10:58 AM