Home Cryptocurrency Fed PCE Inflation Gauge Eases In March, But Rate Hike Bets Hold

Fed PCE Inflation Gauge Eases In March, But Rate Hike Bets Hold

by WOOWinvest
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Higher Prices Likely Coming at the Pump, in Stores

Data on Friday showed the Fed’s preferred measure of U.S. inflation eased from last month’s multi-decade highs, but likely not fast enough to disrupt the central bank’s rate hike path ahead of a policy meeting in Washington next week.

The Bureau of Economic Analysis reported that the core PCE price index rose 5.2% in March from a year earlier, retreating from its highest level since 1983, and was up 0.3% for the month, a figure that was largely in line with Wall Street forecasts and could be an early sign of easing consumer price pressures sign. The increase in February was revised down to 0.3% from 0.4%.

Headline inflation accelerated to its fastest pace in 40 years in March, the U.S. Bureau of Labor Statistics said earlier this month, but data showed so-called core inflation, which strips out volatility such as food and energy prices, rose just 0.3 percent this month, an annual increase The rate was 6.5%, slightly below Wall Street’s consensus estimate.

However, the overall PCE index rose 0.9% month-on-month and 6.6% year-over-year, the highest level since 1980. Personal income rose 0.5% faster than expected, while personal spending rose 1.1%, BEA noted, well ahead of Wall Street’s consensus forecast.

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Stocks on Wall Street futures were little changed after the data, with futures tied to the Dow Jones Industrial Average opening 150 points lower, while futures tied to the S&P 500 were down 5.4% for the month, priced at a 44-point slide.

The yield on the benchmark 10-year U.S. Treasury note edged up to 2.885%, while the U.S. dollar index, which tracks the greenback against a basket of six global currencies, fell to 103.225 from a near two-year high

CME Group’s FedWatch tool showed a 98.7% chance of a 50 basis point hike in March and a similar chance of a 75 basis point hike in June.

The Atlanta Fed’s real-time benchmark GDPNow forecast tool showed U.S. economic growth was growing at a 0.4% pace, while the Commerce Department’s first estimate of first-quarter growth showed a contraction of 1.4%, the first time in two years.

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