The Federal Reserve said on Tuesday that the US recovery was gaining traction, and inflation pressure from soaring energy costs should be short-lived, allowing it to maintain its support for the economy.
The US central bank unanimously decided to continue its $600 billion bond-purchase program despite a considerably more upbeat assessment of the economy and the job market.
US producer prices surged in February at their fastest pace in just over 18 months, rising 1.6%, after rising 0.8% in January. Economists had expected producer prices to rise 0.7% for the month while the year-on-year figure came in at 5.5%, after advancing 3.6% in January.
US consumer prices also rose at their fastest pace in more than 18 months in February as fresh data confirmed the US economy was accelerating. Large gains in food and energy costs propelled inflation sharply higher over the past three months, while February’s Consumer Price Index rose 0.5%, the largest increase since June 2009.
In the UK, the percentage of Britons out of work rose to its highest in over 14 years for the three-month period ending in January, data released by the International Labour Organisation on Wednesday showed, prompting calls from business and unions for measures to boost jobs in next week’s annual budget.
The unemployment rate unexpectedly rose to 8% from 7.9%, just below the 8.1% rate last seen in 1996. The jobless rate among 18 to 24-year-olds seeking work rose to 18.3%, the highest since records began in 1992.
Yet the number of people claiming unemployment benefit in February fell by an unexpected 10,200. Wednesday’s data offered a mixed picture at a time when the Bank of England is considering raising interest rates for the first time since 2007.
In the eurozone last week, core inflation, which excludes volatile items such as energy and food prices, slowed to a year-on-year level of 1% in February from January’s 1.1%.
Non-core inflation, meanwhile, accelerated to its fastest pace in more than two years in February, rising 2.4% from 2.3% in January. That is the highest level since October 2008 and exceeded the European Central Bank’s 2% limit for a third month. Labour costs rose 1.6% in the fourth quarter from a year ago.
This article has been prepared by Bank of Valletta plc for general information purposes only.