HomeFinancial MarketsPCE Index Expected to Rise By Most in a Year

PCE Index Expected to Rise By Most in a Year

The personal consumption expenditures (PCE) price index, known to be the Federal Reserve’s preferred inflation gauge, is expected to rise at its quickest pace in over a year. The PCE is forecasted to show a 0.4% rise from the previous month; only the second straight monthly acceleration in the past two years. Annualized on a three- or six-month basis, the PCE rebounds above the Fed’s 2% inflation target.

Even with this data depleting investors’ hopes for an interest rate cut, the Fed remains adamant that it’s in no rush to lower borrowing costs as it will first look for evidence that inflation is retreating on a sustained basis. Still, Bloomberg Economics appears to be of the opinion that signs of returning inflation will not necessarily lead to monetary tightening either.

“The stage is set for monthly PCE inflation to jump following hot CPI and PPI reports. While that certainly won’t put the Fed at ease, we think policymakers will largely look through the January increase,” Bloomberg Economics wrote.

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