It is well-known the US Fed’s preferred measure of core inflation is the personal consumption expenditure (PCE) price index. As such, markets around the world pay a lot of attention to the figures which are published by the US Bureau of Economic Analysis on a monthly basis. The latest release shows a rise in the core PCE to 1.7% (yoy) and 0.3% for January.
The latest batch of data has added weight to expectations of further rate rise out of the Fed but the disrupted state of financial markets around the globe has cast some doubts on the certainty of such rises. Fed officials have made references to the fragility of markets so it’s something which we know they are paying attention to.
ANZ said, “In a perfect world, the lift in the Fed’s preferred measure of inflation, together with the strong labour market, would make the Fed’s choice of what to do with policy from here a pretty easy one – and to be fair, we still expect the Fed to hike this year (from June). But the world is far from an easy place for policy makers at present.”