“The rebound in productivity is restraining labor costs and keeping inflation in check,” an economist says.
The Fed doesn't see "a strong case for moving [rates] in either direction" amid weak inflation and solid economic growth.
“The economy is in a sweet spot for now," with inflation pressures remaining too weak for the Fed to raise interest rates.
“The uptick in inflation, being largely driven by higher gas prices, is unlikely to worry investors or the Federal Reserve."
The unexpectedly large gain suggests employers "have not let up one bit on their hiring in response to risks out there in the world economy."
The central bank indicated it will slow the pace of interest rate increases in response to changing economic conditions.
The Fed will view the first decline in the CPI since March as "further proof that price pressures are building more slowly than some have feared."
The overall financial impact of the Tax Cuts and Jobs Act is difficult to calculate and may be viewed differently by optimists and skeptics.
"The inflation picture is still fairly tame, certainly not heating up enough to push the Fed to a more aggressive stance."
U.S. shoppers are benefiting from moderate inflationary pressures, while incomes increased 0.5% last month.
Wholesale prices were up 2.9% year-to-year but other inflation measures appear to have leveled off around the Fed's 2% target.
The trade war was a drag on the U.S. economy last quarter, but tariffs may have boosted stockpiling of inventories.
