The core PCE Price Index, the preferred gauge of inflation by the Fed, increased by 5.40% in February, the highest since April of 1983, from 5.20% in the previous month. Still, the reading came below market expectations of 5.5%. Meanwhile the consumer price index has been running even hotter, with prices increasing by a massive 7.9% for the 12 months ending in February. Key contributors to the spike in PCE include 'Motor Vehicles & Parts', 'Housing', and 'Gasoline & Other Energy Goods'. Also it is worth remembering that all of this was before Putin invaded Ukraine.
Inflation hits 40-year high in key gauge watched by Fed. The index is well above the Federal Reserve's 2.0% target. Source: Bloomberg via ZeroHedge
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Open real account TRY DEMO Download mobile app Download mobile appToday's data is another reminder that inflation has been persistently high and more people believe it may throw the US economy into recession. This may in turn push FED to take more decisive actions. In the last couple of weeks, several US central bankers indicated they are open to the idea of a 0.5% rise in rates, including Chair Powell, especially that recent data showed that the US labour market is in good health, while spending is decreasing. Therefore tomorrow's strong NFP report could ramp up chatter of a 50 basis point hike.
