The Fed's preferred PCE inflation gauge strengthened, likely to remain unchanged for now

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

The March PCE inflation rate was revised to remain at 3.5%. Excluding volatile food and energy components, the core PCE price index in April rose 3.3% year-over-year, compared with a 3.2% increase in March. The Fed uses the PCE inflation gauge as a reference for its 2% inflation target. Financial markets expect the Fed to keep the benchmark interest rate in the range of 3.50% to 3.75% until 2027. (Jin Shi)