Fed’s Preferred Inflation Gauge is Stagnant
April 30, 2019
The personal consumption expenditures (PCE) index saw no movement in March and remained well below the Federal Reserve’s inflation target. While consumer spending has increased in recent months, a commensurate increase in prices has not been seen. The “core” PCE, which strips out the volatile food and energy components, was flat for the month, and up 1.6 percent year-over-year.
The central bank uses the PCE index as its key inflation method, and views 2 percent as its target for price stability. With inflation well below that target, the Fed abandoned its plans for further rate increases. Many economists are now calling for rates cuts.