Fresh evidence of success in the fight against inflation was provided to U.S. Federal Reserve officials on Friday, raising hopes that they will use their meeting next week to announce interest rate decreases beginning in September.
The Bureau of Economic Analysis of the Commerce Department announced that last month's personal consumption expenditures (PCE) price index increased by just 0.1%.
This caused the annual growth rate, which the Fed targets at 2%, to rise to 2.5% from 2.6% in May.
Before reducing rates, Fed officials have stated that they want to be certain that inflation is moving stably back to 2%. They anticipate maintaining the policy rate between 5.25% and 5.5% the next week, with inflation gradually approaching but still above that target.
"From the Fed’s perspective, cumulatively, we think the data show enough progress - on both inflation and labor market conditions - for policymakers to open the door to a rate cut in September at next week’s FOMC meeting," wrote High Frequency Economics' chief US economist Rubeela Farooqi.
Following the release of the data, traders of Fed policy rate futures made a little increase to their bets that the Fed will slash rates three times by year's end.
According to the study, core PCE prices—which the Fed analyses to predict inflation—accelerated by 0.2% last month from May, slightly faster than the 0.1% that Reuters surveyed experts to predict. Core PCE prices omit volatile food and energy costs.
(Source:www.straitstimes.com)
The Bureau of Economic Analysis of the Commerce Department announced that last month's personal consumption expenditures (PCE) price index increased by just 0.1%.
This caused the annual growth rate, which the Fed targets at 2%, to rise to 2.5% from 2.6% in May.
Before reducing rates, Fed officials have stated that they want to be certain that inflation is moving stably back to 2%. They anticipate maintaining the policy rate between 5.25% and 5.5% the next week, with inflation gradually approaching but still above that target.
"From the Fed’s perspective, cumulatively, we think the data show enough progress - on both inflation and labor market conditions - for policymakers to open the door to a rate cut in September at next week’s FOMC meeting," wrote High Frequency Economics' chief US economist Rubeela Farooqi.
Following the release of the data, traders of Fed policy rate futures made a little increase to their bets that the Fed will slash rates three times by year's end.
According to the study, core PCE prices—which the Fed analyses to predict inflation—accelerated by 0.2% last month from May, slightly faster than the 0.1% that Reuters surveyed experts to predict. Core PCE prices omit volatile food and energy costs.
(Source:www.straitstimes.com)
