Fed's Preferred Inflation Gauge Shows Prices Edged Down in June but Remain Above Target
The Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures (PCE) index, showed a slight decline in June. The PCE rose by 3.7% year-over-year, down from 4.1% in May and still well above the Fed's 2% target. Core PCE, which excludes food and energy prices, came in at 3.3%, also lower than the previous month but still elevated. The monthly core PCE increased by just 0.1%, below expectations of 0.2%. This follows a drop in the Consumer Price Index (CPI) to 2.6% on a core basis, aided by falling gasoline prices. However, rising tensions between the U.S. and Iran have pushed energy prices higher again, raising concerns about inflationary pressures. While the Fed held interest rates steady at its latest meeting, several regional bank presidents dissented in favor of rate hikes to address persistent inflation. Federal Reserve Chairman Kevin Warsh emphasized that bringing down inflation would take time and cannot be achieved quickly.
Topics: Federal Reserve (Fed) inflation monetary policy PCE index