Current:Home > StocksThe Federal Reserve's preferred inflation tracker shows cooling prices. Here's the impact on rates. -TrueNorth Capital Hub
The Federal Reserve's preferred inflation tracker shows cooling prices. Here's the impact on rates.
View
Date:2025-04-17 03:27:41
An inflation measure closely tracked by the Federal Reserve slowed to its smallest annual increase in three years, prompting some Wall Street economists to forecast an increased likelihood that the central bank could cut rates in September.
The personal consumption expenditures index, or PCE, rose 2.6% in May on a year-over-year basis, the U.S. Commerce Department said on Friday. That represents its lowest increase since March 2021, according to EY senior economist Lydia Boussour in a Friday report, adding that it signals "cooler consumer spending momentum and easing inflation."
The Federal Reserve earlier this month scaled back its forecast to just one rate cut in 2024 from its prior expectation for three reductions due to stubborn inflation, which remains higher than the central bank's 2% annual target. Friday's PCE numbers could portend an increasing likelihood that the Fed could cut rates at its September meeting, Wall Street economists said.
"[T]he market is now giving the Fed the green light to consider a rate cut at their September 18th meeting. Currently, the odds for a rate cut at that meeting are approximately 75%," wrote John Kerschner, head of U.S. securitised products at Janus Henderson Investors, in a Friday email.
Excluding volatile food and energy prices, so-called core inflation rose 0.1% from April to May, the smallest increase since the spring of 2020, when the pandemic erupted and shut down the economy.
Prices for physical goods actually fell 0.4% from April to May. Gasoline prices, for example, dropped 3.4%, furniture prices 1% and the prices of recreational goods and vehicles 1.6%. On the other hand, prices for services, which include items like restaurant meals and airline fares, ticked up 0.2%.
The Fed has raised its benchmark rate 11 times since 2022 in its drive to curb the hottest inflation in four decades. Inflation has cooled substantially from its peak in 2022, yet average prices remain far above where they were before the pandemic, a source of frustration for many Americans and a potential threat to President Joe Biden's re-election bid.
—With reporting from the Associated Press.
- In:
- Inflation
Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.
TwitterveryGood! (247)
Related
- Dick Vitale announces he is cancer free: 'Santa Claus came early'
- Elon Musk’s Daughter Vivian Responds to His Comments About Her Transgender Identity
- Rescued walrus calf ‘sassy’ and alert after seemingly being left by her herd in Alaska
- Recall of Boar’s Head deli meats announced during investigation of listeria outbreak
- Selena Gomez's "Weird Uncles" Steve Martin and Martin Short React to Her Engagement
- How many US athletes are competing at 2024 Paris Olympics? Full Team USA roster
- 'Nightmare': Wildfires burn one of most beautiful places in the world
- Fly on Over to See Ariana Grande and Cynthia Erivo's Wicked Reunion at the Olympics
- 'Squid Game' without subtitles? Duolingo, Netflix encourage fans to learn Korean
- How many countries are participating in the 2024 Paris Olympics?
Ranking
- Juan Soto to be introduced by Mets at Citi Field after striking record $765 million, 15
- Kamala Harris, Taylor Swift, Jennifer Aniston and when we reduce women to 'childless cat ladies'
- Harris will carry Biden’s economic record into the election. She hopes to turn it into an asset
- Justice Department defends group’s right to sue over AI robocalls sent to New Hampshire voters
- Dick Vitale announces he is cancer free: 'Santa Claus came early'
- 'What We Do in the Shadows' teases unfamiliar final season
- How Josh Hall Is Completely Starting Over After Christina Hall Split
- Justin Timberlake's Lawyer Says He Wasn't Intoxicated at the Time of DWI Arrest
Recommendation
Why we love Bear Pond Books, a ski town bookstore with a French bulldog 'Staff Pup'
2024 Olympics: Why Simone Biles Skipped the Opening Ceremony in Paris
Arkansas standoff ends with suspect dead after exchange of gunfire with law enforcement
Proof That Sandra Bullock's Style Has Always Been Practically Magic
Bill Belichick's salary at North Carolina: School releases football coach's contract details
Steward Health Care announces closure of 2 Massachusetts hospitals
Ryan Reynolds’ Trainer Don Saladino Details His Deadpool & Wolverine Workout Routine
Hope you aren’t afraid of clowns: See Spirit Halloween’s 2024 animatronic line