Fed's favourite indicator confirms slowing inflation trajectory
|Friday's market focus was on US household income and spending data and the Personal Consumption Expenditures Index (PCE), the Fed's preferred measure of inflation.
Core PCE Price Index rose 0.3% m/m and 2.8% y/y, which is in line with average expectations and below the previous month's readings of 0.5% and 2.8%, respectively. The lack of surprises here promises to ease pressure on the Fed, as the official CPI numbers in recent months have not created the mood for an imminent easing of policy. Some observers have begun to suggest that the FOMC may not cut rates before the end of the year.
Today's data may support expectations of a June cut. A shift in rate expectations from a 64% chance of a June cut to 100% is potentially negative for the dollar.
For February, personal spending rose 0.8% after 0.2% the previous month and 0.5% expected. Incomes rose 0.3% in February but were up 1% in January. Spending keeps pace with incomes, and this is positive for markets as high spending is positive for earnings.
The savings-to-income ratio fell to 3.6% in February, the lowest since December 2022, and a downward trend has continued since the middle of last year.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.