Strength in Services Inflation Likely Supports Fed Pause on Rates

Efforts to stem inflation in the cost of services didn’t show much progress in April even though airfares continued to fall. That will help justify the Fed’s continued wait-and-see approach to cutting interest rates, even as overall inflation trends closer to the 2% target.

The BLS’s index for services, excluding those related to energy, rose 0.3% month over month in April. That is an acceleration from a 0.1% monthly pace in March.

The uptick was driven by shelter costs, but also prices for transportation services and medical-care services.