The Fed's preferred PCE inflation rate strengthened, and it may continue to hold steady in the future

Odaily Planet Daily News 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' view that the Federal Reserve is likely to keep interest rates unchanged for a long period before 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 its benchmark interest rate in a range of 3.50% to 3.75% until 2027. (Jin Shi)