Fed’s preferred inflation measure slips closer to yearly target, keeping chance of a March rate cut alive.
The Federal Reserve’s (Fed) preferred measure of inflation for the month of December 2023 has just been released, and it keeps alive the chances of a rate cut in March. PCE (Personal Consumption Expenditures) as a measure of inflation differs to the wider-known CPI index in that it only measures goods and services consumed by individuals, and that is why the Fed prefers PCE as a broad gauge of inflation when judging policy. Core PCE was forecast to show 0.2% growth over the month and it came out in-line. The yearly PCE core inflation rate is now 2.9% - much closer to the Fed’s target rate of 2% than it has been at any time over the last three years.
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