Federal Reserve's Preferred PCE Inflation Rate Strengthens, May Continue to Hold Steady in the Future

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

The PCE inflation rate for March was revised to remain at 3.5%. Excluding volatile food and energy components, the core PCE price index rose 3.3% year-over-year in April, compared to 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. (Jinshi Data)