Chair Jerome Powell said the latest PCE report — a key gauge of inflation — released Friday was “pretty much in line” with expectations, but the Federal Reserve wants to be “confident” before it considers reducing interest rates.
The latest personal consumption expenditures price index report found that inflation rose 2.8% annually in February, which was expected, meaning the Fed will likely wait before considering cutting interest rates.“
The report that came out this morning is pretty much in line with our expectations. So CorePC, as you mentioned, is at 2.8% on a 12-month basis. Headline is at 2.5%.
That's what we were expecting, and it's good to see something coming in line with expectations,” Powell said at a Macroeconomics and Monetary Policy Conference in San Francisco.
Powell noted that inflation numbers in January were high, followed by a lower reading in February, but still within the desired range.
“[February was] not as low as most of the good readings we got in the second half of last year. But it's definitely more along the lines of what we want to see,” Powell said. “So, what we've said is that we don't see it as likely to be appropriate that we would begin to reduce interest rates until the committee — the Federal Open Market Committee — is confident that inflation is moving down to 2% on a sustained basis. And what do we need to get that confidence? It's just more good inflation readings, like the ones we were getting last year.”
