Fed's Favorite Inflation Gauge Remains High, Rate Cuts May Be Hindered in Coming Months

Odaily News Shortly before the outbreak of the Iran conflict, the Federal Reserve's preferred inflation gauge maintained a stable and relatively fast growth rate, highlighting the challenges the Fed faces in trying to curb stubborn price pressures. Following the release of a series of economic data—the US Core PCE Price Index year-on-year for February recorded 3.0%, the US Real GDP Annualized QoQ final value for Q4 recorded 0.5%, and US Initial Jobless Claims for the week ending April 4th recorded 219,000—the market reaction was muted.

The Federal Reserve views the PCE index as the most accurate barometer of US inflation trends. The latest data indicates that the inflation rate is still far from the Fed's 2% target, and due to surging oil prices, the inflation rate may rise further in the short term. Persistently high inflation will also hinder the Fed from lowering interest rates for at least the next few months. (Jin10)