Fed's Favored PCE Inflation Strengthens, May Continue to Hold Steady

Odaily reported that driven by rising energy prices due to the Iran war, the U.S. inflation rate in April hit its fastest pace in three years, further solidifying economists' views that the Federal Reserve may keep interest rates unchanged for a long period until next year. The U.S. Bureau of Economic Analysis said on Thursday that over the 12 months ending in April, the PCE index surged by 3.8%, the largest increase since May 2023.

The PCE inflation rate for March remained unchanged at a revised 3.5%. Excluding volatile food and energy components, the core PCE price index in April increased by 3.3% year-on-year, compared to a 3.2% rise in March. The Fed uses the PCE inflation gauge as a reference for its 2% inflation target. Financial markets expect the Fed to maintain its benchmark interest rate in the range of 3.50% to 3.75% until 2027. (Jin Shi)