The Fed’s next inflation test is here. How it will guide interest rates.
Subscribe to enjoy similar stories. The Federal Reserve’s preferred inflation gauge cooled in January, if economists’ forecasts are right. The Bureau of Economic Analysis is scheduled to release the latest reading for the personal consumption expenditures, or PCE, price index on Friday, Feb.
28, at 8:30 a.m. Eastern. Economists expect inflation rose 0.3% in January and 2.5% from a year earlier, according to a FactSet survey.
By comparison, the index rose 0.3% month over month in December and measured 2.6% year over year. While slower annual price growth should calm fears that inflation is reaccelerating, it likely won’t be enough to nudge the Federal Reserve to cut interest rates. The Fed paused rate cuts after its December policy meeting, when it lowered the federal funds rate to a current target range of 4.25%-4.50%.
Cooler inflation might not be enough to soothe shoppers, either. Americans continue to grapple with elevated grocery, housing, and auto insurance costs. Worries about rising prices and tariffs were behind recent lower-than-expected consumer sentiment and confidence readings from both the University of Michigan and Conference Board.
Economists expect that so-called core PCE, which excludes the more volatile food and energy costs, to have measured 2.6% growth in January from a year earlier, which would be a notable deceleration from December’s 2.8% pace. Core PCE inflation likely rose o. 3% month over month in January, compared with a 0.2% rate in December, according to economists’ expectations.
Read more on livemint.com
