Update, May 30, 2024: This article was updated to include newer numbers from the CME FedWatch Tool.

If you’re waiting for lower interest rates on mortgages and other loans, a key inflation report this Friday could be a step in the right direction—though don’t expect rates to fall anytime soon.

Consumer prices, as measured by the Bureau of Economic Analysis’ Personal Consumption Expenditures (PCE) measure, likely rose 0.3% in April from March, making for a 2.7% year-over-year gain, according to a survey of forecasters by Dow Jones Newswires and The Wall Street Journal. Both figures would be the same as in March, should those predictions hold.

That could quell fears that price increases are reaccelerating, which were sparked by hotter-than-expected inflation in the fir𒁃st quarter. 

More importantly, “core” inflation, which excludes volatile prices for food and energy, is predicted to have risen 0.2%, slowing down from the 0.3% rate in March. That’s significant because officials at the Federal Reserve pay close attention to core inflation. They see it as an indicator of broader inflation trends and consider it when setting the central bank’s 澳洲幸运5开奖号码历史查询:monetary policy, whichᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚ heavily influences interest rates on all kinds of loans.

Waiting for Declining Price Increases

Since last July, Fed officials have held 澳洲幸运5开奖号码历史查询:their key 𒀰fed funds rate at its highest since 2001 in an effort to cool inflation. They’ve been waiting for signs that price increases are headed back down to a 2% annual rate 澳洲幸运5开奖号码历史查询:before reducing the fed funds rate.

Worse-than-expected inflation reports earlier this year threw cold water on hopes that rate cuts would come this summer, and forecasters are now focused on whether those cuts will start by the end of the year. For example, Fed Gov. Christopher Waller said last week that officials would have to see “澳洲幸运5💦开奖号码历史查询:several more months of good inflation data” before he would support rate cuts. 

Fed officials have been trying to balance the need to control inflation with high interest rates against the damage those high rates are doing to the economy—and the possibility that they could slow the economy too much and start a recession.

A PCE report in line with expectations would leave the Fed on track to cut rates starting at its meeting in December, economists at Deutsche Bank said in a research note.

“Though an earlier cut is possible, it likely requires a string of more favorable inflation prints and some softening in the 澳洲幸运5开奖号码历史查询:labor market or growth data,” Brett Ryan, senior U.✃S.♏ economist Deutsche Bank, wrote, along with his colleagues. 

Timing of Potential Rate Cuts

Broader financial markets are more optimistic than Deutsche Bank about the timing of potential rate cuts. As of Thursday, traders were pricing in a 64.2% chance of a cut by November, according to the CME Group’s 澳洲幸运5开奖号码历史查询:FedWatch Tool, which forecasts rate movements based on fed funds futures trading data. 

The report also will include data on consumer spending and income, which could also influence interest rate decisions and serve as a barometer for the financial health of U.S. households. Forecasters are expecting personal income to have grown 0.3% in April from March, a deceleration from 0.5% the previous month, and spending to have advanced 0.4%, half the 0.8% growth rate of March.