http://www.nytimes.com/2005/04/21/business/21econ.htmlFears of rising inflation sent stocks to new lows for the year yesterday after the government reported a sharp increase in consumer prices that all but guaranteed that the Federal Reserve would continue to push interest rates higher even as the economy may be slowing.
Last week investors were worried about the effect of slower economic growth on corporate earnings. The addition of inflation fears to the mix could put nerves on Wall Street even more on edge.
A 0.6 percent increase in the Consumer Price Index last month was the largest in five months, the government reported. The 0.4 percent jump in the core rate, which excludes food and energy, was twice the forecast from analysts and the biggest monthly increase in nearly four years.In short: Fed has to raise interest rates to control inflation, further slowing down the economy. This spells trouble.