Fed could stay on hold for much of 2025.
by Sarah Hansen
Morningstar Advisor
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[…] Forecasts for the January Personal Consumption Expenditures Price Index report suggest overall inflation remains higher than Fed officials and investors would like.
In January, economists expect that overall PCE inflation rose 0.3% on a monthly basis and 2.5% on an annual basis, according to FactSet’s consensus estimates. They anticipate that the core measure of PCE inflation, which excludes volatile food and energy prices, rose 0.3% on the month and 2.6% on the year.
Even factoring annual seasonal adjustment into the data, Nationwide financial market economist Oren Klachkin says inflation is still looking sticky thanks to strong economic conditions. “When you have an economy that continues to run relatively well, the side effect of that is that inflation continues to run high,” he explains. “That is the kind of environment we were in late last year, and I think that is still the case now … we’re still in a relatively elevated inflation environment overall.” Klachkin’s team is expecting 0.3% monthly growth for both the overall and core measures of PCE.