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Analysis

Mixed Bag of PCE Inflation Likely Seals the Fate of H1 Rate Cuts

Increased inflation pressure in key areas reinforces the Fed’s stance that interest rate cuts can wait.

The Personal Incomes and Outlays report for March 2024 continued giving the Federal Reserve reasons to keep interest rates fixed for the time being. That likely means none of the expected rate cuts until July at the very soonest.

Personal consumption expenditure (PCE) were up 0.8% month over month. The PCE index, the favored inflation metric for the Fed, were up 0.3% month over month as they were in February, following a 0.4% increase in January. On an annual basis, PCE was up 2.5% in March. Take out food and energy to reduce volatility and it was 2.8%.

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Erik Sherman

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