2024-03-29 13:32:00
The consumer price index (PCE), which excludes food and energy prices and is considered the Fed’s preferred inflation measure, rose 0.3% in February, in line with the Wall Street consensus and below a 0.4% increase in January. The index increased by 2.8% compared to the year before.
The data comes as economic indicators this year point to a resilient economy, especially the labor market, with warmer-than-expected inflation. The central bank continues to operate with a “wait and see” approach in regards to lowering interest rates, with the Fed waiting to see if inflation is indeed progressing towards the annual target of 2%.
Services PCE inflation excluding energy and housing rose 0.2% last month after a 0.7% jump in January. Consumer spending, which accounts for more than two-thirds of US economic activity, jumped 0.8% in February after rising 0.2% in January.
Fed officials last week left interest rates unchanged in the range of 5.25%-5.50%, as they anticipate three rate cuts this year. The markets are now pricing in a first interest rate cut only in June with a 61% probability of a quarter percentage point cut. The Fed chairman noted at the press conference after the interest rate decision that despite slightly warmer inflation data earlier this year, the central bank’s policymakers continue to look at the positive long-term trends.
Powell added that price growth had “eased considerably”, although he acknowledged that headline inflation remained too high. The governor also said that Fed officials continue to remember what the consequences could be if inflation does not decrease. Powell continues to believe that the current interest rate is helping to bring inflation back to the 2% target. “Our restrictive stance on monetary policy has put downward pressure on economic activity and inflation,” he said.
Tapering policy, or lowering interest rates too quickly, could reverse the progress the U.S. has seen so far in reducing inflation, he said. This may “ultimately require even tighter policy to get inflation down to 2%,” Powell warned.
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Gold for 10000 dollars per ounce!!! (L.T.)
Dan 03/29/2024 16:43
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