The PCE Index is the Fed’s Preferred Gauge of Inflation as it Considers Rate Cuts
by Diccon Hyatt
Investopedia
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The Fed’s preferred gauge of inflation likely stayed stubbornly high in March, though the details of Friday’s official report could complicate the picture.
The cost of living measured by the Bureau of Economic Analysis’s Personal Consumption Expenditures (PCE) index is expected to have increased 2.6% over the 12 months ending in March, according to a survey of forecasters by Dow Jones Newswires and The Wall Street Journal.1 That would be an acceleration from the 2.5% annual rate reported in February, and still above the 2% rate officials at the Federal Reserve target when they set the nation’s monetary policy.
Economists also expect core inflation, which excludes volatile prices for food and energy, to have declined to 2.7% from 2.8% in February. That’s a key measure for anyone concerned with interest rates.