The latest reading of the Fed’s favorite inflation gauge showed that inflation slowed in April as prices rose in line with Wall Street expectations.
The core Personal Consumption Expenditures (PCE) index, which excludes food and energy costs and is closely watched by the Federal Reserve, rose 0.2% in April, in line with Wall Street expectations , but slower than the 0.3% increase in March. .
Core PCE rose 2.8% in April from the previous year, in line with estimates and unchanged from the annual increase over the past two months. April’s reading marked the slowest month-over-month increase for the 2024 index.
The report comes as markets have adjusted to the prospect that the Federal Reserve will keep interest rates higher for longer than initially feared. As of Friday morning, investors had estimated a roughly 50-50 chance that the Fed’s first rate cut would happen in September, according to the CME FedWatch Tool.
Fed officials have repeatedly said they are waiting for more confidence in the decline in inflation before it would be appropriate to cut rates.
On Thursday, New York Fed President John Williams said he believes inflation will start to fall again in the second half of 2024.
“I view some of the recent inflation figures primarily as a reversal of the unusually low rates of the second half of last year, rather than as a break in the overall downward trajectory of inflation,” Williams said in a speech to the Economic Club or New York.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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