The latest US inflation data for April revealed a persistent rise in the Personal Consumption Expenditures (PCE) price index, increasing by 0.3%, which remained in line with March figures and market expectations. The annual inflation rate also held steady at 2.7%, maintaining a level above the Federal Reserve’s 2% target. The core PCE, which strips out volatile food and energy prices, indicated a slight deceleration, rising by 0.2% compared to the 0.3% increase in March, with the annual rate staying at 2.8%.The consistent inflation rates, together with signs of cooling consumer spending, appear to be tempering expectations for imminent interest rate cuts by the Federal Reserve. Financial markets are now pricing in a roughly 50% chance of a rate reduction by September, a shift from previous anticipations of a cut as early as March or June. Amid these developments, stock markets showed mixed reactions, with major indices like the S&P 500 and Dow Jones experiencing slight fluctuations following the release of the inflation data.The Federal Reserve, which has been steadfast in its interest rate policy, keeping the benchmark rate between 5.25% and 5.50% for the past ten months, continues to face the challenge of curbing inflation without stifling economic growth. As the central bank monitors the inflation trajectory, investors and policymakers alike remain vigilant for any signs that could indicate the direction of future monetary adjustments.
Key points
- US PCE inflation rate rose by 0.
- Annual inflation rates remained steady at 2.
- Market expectations for a Federal Reserve rate cut by September are now at 50%, reflecting uncertainty in the inflation outlook.
- Consumer spending showed signs of cooling, potentially influencing the Fed’s interest rate decisions.
3% in April, matching March’s figure and expectations.
7% for PCE and 2.
8% for core PCE, suggesting persistent inflationary pressures.
Contradictions👾While most sources reported that the core PCE rose 0.
2% in April, one source indicated it rose by 0.
3%, creating a slight discrepancy in reported figures.
