Fed’s Favorite Gauge Is Seen Showing Faster Inflation

The Federal Reserve's preferred inflation measure, the Personal Consumption Expenditures price index, is projected to show a slight acceleration in price growth for April. Economists surveyed by Reuters anticipate the PCE price index will rise 0.3% in April, up from 0.2% in March. This expected uptick is likely to reinforce the Federal Reserve's cautious stance on inflation and its inclination to maintain higher interest rates for a longer period. The core PCE price index, which excludes volatile food and energy prices, is also expected to increase by 0.3% in April, mirroring the previous month's pace. This sustained core inflation rate, if realized, would further solidify the view among many Federal Reserve officials that inflationary pressures remain persistent, potentially delaying any significant moves towards interest rate cuts. The data is scheduled for release on May 31, 2024. A faster-than-expected rise in inflation could increase pressure on the Fed to consider further rate hikes, though most economists still expect the central bank to hold rates steady at its upcoming meetings.