PCE index points to easing inflationary pressures; rose 2.1% in April
The April personal consumption expenditures (PCE) price index, an inflation metric closely monitored by the Federal Reserve, pointed to further easing inflationary pressures in the U.S., potentially offering the Federal Reserve room to ease monetary policy once more, News.az reports citing Investing.
The PCE price index recorded a 2.1% annual increase during the month, the lowest since February 2021, a drop from March’s reading of 2.3%.
On a monthly basis, the index rose 0.1%, compared with a flat reading in March.
Meanwhile, the so-called "core" metric, which strips out more volatile items like food and fuel, came in at 2.5% annually, below February’s 2.6%. Month-on-month, it rose 0.1%, compared with the previous month’s flat reading.
The U.S. economy contracted at an annual rate of 0.2% in the first quarter, according to the Bureau of Economic Analysis’ second estimate released Thursday, suggesting that the Trump administration’s chaotic trade policies are hampering economic growth in the world’s largest economy.
The rate-setting Federal Open Market Committee next meets on June 18, having opted to leave borrowing costs unchanged at its first three scheduled decisions in 2025.
Markets expect that the FOMC will cut rates from their current level of 4.25% to 4.5% by December, and probably to under 4%.
"The numbers weren’t terribly controversial," said analysts at Vital Knowledge, in a note. "The PCE was net positive/dovish, although not shocking given the cool PPI/CPI from April out earlier this month and most people are still wary of trusting numbers right now as the effects of tariffs won’t be known for several more months."
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