Fed’s Favored Inflation Gauge Rose 2.5% in February - WSJ
Core PCE Values have come in for the month of February, and they were in line with expectations:
Core PCE - Up 2.5% over the last 12 months thru February
Core PCE excluding food and energy prices - Up 2.8%
Fed Chairman Jerome Powell was happy to see these numbers align with expectations. Fed officials confirmed last week that they were still on track for 3 rate cuts in 2024, with the timing of these cuts being uncertain.
Many traders believe that the first cut will be coming around June. However, since the economic is displaying strong activity currently, the Fed is in no rush to cut rates.
Powell also stated that the interest rate setting has left the central bank in a good position to react to a range of different paths for the economy. This includes the possibility of cutting rates more than anticipated if the economy slows sharply or holding them at their current level for longer if inflation doesn’t slow as much as expected.
Overall, as I understood the article is there is a cautious yet adaptable approach by the Federal Reserve, balancing concerns about inflation with the need to support economic growth. It is interesting to see if there are more aggressive rate cuts if the economy slows sharply or maintaining rates for longer if inflation persists.
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