Fed's favored inflation gauge slows in April while price increases remain sticky
Fed's favored inflation gauge slows in April while price increases remain sticky
Fed's Inflation Gauge Shows Slowdown in April
Core PCE Index Movement
The core Personal Consumption Expenditures (PCE) index increased by 0.2% in April, indicating a slowdown compared to March's 0.3% rise.
Annual Increase Rate
Year-over-year, the core PCE was up 2.8% in April, consistent with the past two months and aligning with economic forecasts.
Market and Fed Reactions
The market is adapting to expectations of prolonged high interest rates by the Fed, with mixed predictions on when rate cuts may begin.
Economic Outlook
Economists anticipate further inflation declines, potentially influencing the Fed to consider rate reductions by September.
What was the year-over-year increase for the core PCE index in April, and how does it compare to previous months?
The year-over-year increase for the core PCE index in April was 2.8%, which was in line with estimates and unchanged from the annual increase seen in the last two months. This marked the slowest month-over-month increase for the index in 2024.
What specific inflation gauge does the Federal Reserve prefer, and how did it perform in April?
The Federal Reserve prefers the Personal Consumption Expenditures (PCE) price index as its inflation gauge. In April, the core PCE index, which excludes volatile food and energy costs, rose by 0.2%, slowing down from the 0.3% increase seen in March. This was in line with Wall Street's expectations and marked the slowest month-over-month increase for the index in 2024. Over the past year, core PCE was up by 2.8% in April, unchanged from the annual increase seen in the previous two months.