The Federal Reserve's preferred gauge of inflation held steady last month, but offered a mixed picture of pressures on spending and prices that could further complicate the central bank's interest rate forecasts.
The Bureau of Economic Analysis' PCE price index, released Friday, showed underlying prices held at 2.8% last month, matching Wall Street's forecast of 2.8% and January's reading. The pace of increase was the slowest since March 2021.
On a monthly basis, underlying pressures increased by 0.3%, a slightly slower pace compared to the 0.4% increase in January. The figure also matched Wall Street's consensus estimate.
Markets typically focus on the bureau's core PCE price index, which the Fed considers a more accurate representation of consumer price pressures as it combines changes in spending patterns.
Meanwhile, the broad index accelerated to a 2.5% annual rate, matching Wall Street's forecast and rising from the 2.4% pace in January. Prices rose 0.3% month-on-month, the BEA said, following a 0.4% increase in January.
The BEA also noted that personal income for the month of February rose 0.3%, perhaps reflecting some weakness in the labor market, while spending accelerated from January to increase 0.8%.
Earlier this week, Federal Reserve Governor Christopher Waller said at an event at the Economic Club of New York that there is “no rush to cut the policy rate” given high inflation.
“It is appropriate to reduce the total number of rate cuts or delay them in the future in response to recent data,” Waller added, citing growth and inflation figures for the first two months.
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The US Dollar Index, which tracks the greenback against a basket of global peers, was down 0.05% from yesterday's levels at 104.51.
CME Group FedWatch The tool suggests the market does not expect any changes from the Federal Reserve on rates when it concludes its two-day policy meeting in May.
However, bets on the Federal Reserve starting to cut rates in June remain at around 61%, with markets anticipating two more cuts by the end of the year.
