Finance

More progress on inflation needed before more rate cuts

Published

2 months ago

February 17, 2025

Federal Reserve Bank Governor Michelle Bowman gives her first public remarks as a Federal policymaker at an American Bankers Association conference In San Diego, California, February 11 2019.

Ann Saphir | Reuters

Federal Reserve Governor Michelle Bowman said on Monday that while monetary policy “is now in a good place,” she wants to see data reflect more progress on inflation before cutting interest rates further.

“I would like to gain greater confidence that progress in lowering inflation will continue as we consider making further adjustments to the target range,” Bowman said in a speech at the American Bankers Association.

Rising core goods price inflation since last spring has slowed progress, Bowman said. While she expects inflation to continue to decelerate this year, she said disinflation “may take longer than we would hope.”

“I continue to see greater risks to price stability, especially while the labor market remains strong,” Bowman said.

The most recent consumer price index showed inflation trended higher than expected in January, rising 0.5% month-over-month versus the Dow Jones estimate calling for a 0.3% rise. This put the annual inflation rate at 3%, coming in above consensus forecasts for 2.9%

The Fed maintained its target rate at a range of 4.25% to 4.5% at its January policy meeting.

Bowman said Monday the current level is appropriate for “allowing the Committee to be patient and pay closer attention to the inflation data as it evolves.”

“The current policy stance also provides the opportunity to review further indicators of economic activity and get further clarity on the administration’s policies and their effects on the economy,” continued Bowman.

President Donald Trump’s tariffs against the U.S.’s largest trading partners have raised concerns among economists of higher prices. Expectations for further interest rate cuts in 2025 have weakened on Trump’s trade war. Traders are currently pricing in just a single quarter-percentage-point rate reduction this year, according to CME Group Data.

Finance

More Americans buy groceries with buy now, pay later loans

Published

4 hours ago

April 26, 2025

Business Finance News

People shop for produce at a Walmart in Rosemead, California, on April 11, 2025.

Frederic J. Brown | Afp | Getty Images

A growing number of Americans are using buy now, pay later loans to buy groceries, and more people are paying those bills late, according to new Lending Tree data released Friday.

The figures are the latest indicator that some consumers are cracking under the pressure of an uncertain economy and are having trouble affording essentials such as groceries as they contend with persistent inflation, high interest rates and concerns around tariffs.

In a survey conducted April 2-3 of 2,000 U.S. consumers ages 18 to 79, around half reported having used buy now, pay later services. Of those consumers, 25% of respondents said they were using BNPL loans to buy groceries, up from 14% in 2024 and 21% in 2023, the firm said.

Meanwhile, 41% of respondents said they made a late payment on a BNPL loan in the past year, up from 34% in the year prior, the survey found.

Lending Tree’s chief consumer finance analyst, Matt Schulz, said that of those respondents who said they paid a BNPL bill late, most said it was by no more than a week or so.

“A lot of people are struggling and looking for ways to extend their budget,” Schulz said. “Inflation is still a problem. Interest rates are still really high. There’s a lot of uncertainty around tariffs and other economic issues, and it’s all going to add up to a lot of people looking for ways to extend their budget however they can.”

“For an awful lot of people, that’s going to mean leaning on buy now, pay later loans, for better or for worse,” he said.

He stopped short of calling the results a recession indicator but said conditions are expected to decline further before they get better.

“I do think it’s going to get worse, at least in the short term,” said Schulz. “I don’t know that there’s a whole lot of reason to expect these numbers to get better in the near term.”

The loans, which allow consumers to split up purchases into several smaller payments, are a popular alternative to credit cards because they often don’t charge interest. But consumers can see high fees if they pay late, and they can run into problems if they stack up multiple loans. In Lending Tree’s survey, 60% of BNPL users said they’ve had multiple loans at once, with nearly a fourth saying they have held three or more at once.

“It’s just really important for people to be cautious when they use these things, because even though they can be a really good interest-free tool to help you kind of make it from one paycheck to the next, there’s also a lot of risk in mismanaging it,” said Schulz. “So people should tread lightly.”

Lending Tree’s findings come after Billboard revealed that about 60% of general admission Coachella attendees funded their concert tickets with buy now, pay later loans, sparking a debate on the state of the economy and how consumers are using debt to keep up their lifestyles. A recent announcement from DoorDash that it would begin accepting BNPL financing from Klarna for food deliveries led to widespread mockery and jokes that Americans were struggling so much that they were now being forced to finance cheeseburgers and burritos.

Over the last few years, consumers have held up relatively well, even in the face of persistent inflation and high interest rates, because the job market was strong and wage growth had kept up with inflation — at least for some workers.

Earlier this year, however, large companies including Walmart and Delta Airlines began warning that the dynamic had begun to shift and they were seeing cracks in demand, which was leading to worse-than-expected sales forecasts.