The Personal Consumption Expenditures index, a key inflation gauge used by the Federal Reserve to make interest-rate decisions, held steady in July according to new data from the Department of Commerce.
Prices across the U.S. rose at an annual rate of 2.6% last month, the same as in June and in line with economist forecasts. Core inflation, which excludes the more volatile food and energy categories, rose 2.9% from a year ago, up slightly from June’s 2.8% and the highest since February, according to the report.
The figures illustrate why many Fed officials have been wary about cutting their benchmark interest rate. While inflation is much lower than the roughly 7% peak it reached three years ago, it remains above the central bank’s 2% target.
Fed Chair Jerome Powell hinted in his Jackson Hole address earlier this month that policymakers are likely to cut its short-term rate for the first time December of 2024. But policymakers are expected to proceed cautiously, while Powell has emphasized that any future rate cuts will depend on the path of inflation.
When the Fed reduces its benchmark rate, it often — though not always — lowers borrowing costs for things like mortgages, car loans, and business borrowing. On the flip side, that can spark inflation if the economy grows too quickly.
https://www.cbsnews.com/news/pce-report-today-inflation-july-federal-reserve/
