Pce Inflation Gauge Matches Expectations, Offering Relief to Fed
The latest reading of the Federal Reserve's preferred inflation gauge showed prices rose on a monthly basis but dropped year over year, which should keep interest rates on hold when the central bank meets next in March. The "core" Personal Consumption Expenditures (PCE) index rose 0.3% from the prior month during January, but that rise was in line with expectations. Prices rose 2.6% year-over-year, which was also in line with expectations.
- This modest inflation reading may provide a temporary reprieve for Fed officials, but it will be crucial to monitor subsequent data points to ensure that the trend persists and does not devolve into new, higher inflation pressures.
- How will the Fed's next policy decision on interest rates balance the need to keep inflation under control with concerns about potential economic slowdowns and rising short-term inflation expectations?