Fed's preferred inflation gauge cools boosting rate cut hopes
Published: 14:44 26 Jan 2024 GMT
US inflation pressure eased a touch at the end of last year, according to figures on Friday, strengthening the case for the Federal Reserve to consider cutting interest rates.
According to the Bureau of Economic Analysis, the core personal consumption expenditure grew 2.9% on-year in December, easing from November's 3.2% rise.
The core PCE reading, the Fed's preferred inflation gauge, fell to its lowest level since March 2021, and fell short of FXStreet cited consensus of 3.0%.
The core data excludes food and energy.
The annual headline PCE index grew 2.6%, in line with the rate of expansion in November, again in line with consensus.
Andrew Hunter at Capital Economics said: "The December income and spending data confirm that core PCE inflation has been running at an annualised pace in line with the Fed’s 2% target for seven months now."
"This reiterates the message that there isn’t really any “last mile” of disinflation still to achieve and that, even with real economic growth still resilient, there is plenty of scope for the Fed to start cutting interest rates soon."
