The Federal Reserve's Preferred Measure of Inflation Could Be Down in May

Inflation has declined in recent months, and a report due Friday is expected to provide further evidence that price increases are easing.

Forecasters expect inflation as measured by the Personal Consumption Expenditures (PCE) index slowed down in May, according to a survey of economists by Dow Jones Newswires and the Wall Street Journal. The median forecast calls for PCE prices to 🐼have risen 2.6% over the past 12 months, down from 2.7% in April. “Core” inflation, which excludes volatile prices for food and energy, likely dipped to 2.6% from 2.8%, reaching its lowest since March 2021 and inching towards the Federal Reserve’s goa𒆙l of a 2% annual rate.

If those forecasts are correct, it would confirm what a separate report earlier this month on the Consumer Price Index (CPI) showed: Inflation may still be running too hꦓot for the liking of Fed officials and many household budgets, but it’s on the way down. It would also indicate that a flareup of inflation in the first quarter was more of a bump in the road than a serious economic threat. 

Fed’s Daly Doesn’t See Staflations Signals

San Francisco Federal Reserve President Mary Daly said there is no evidence to suggest "澳洲幸运5开奖号码历史查询:stagflation,” though central bankers do need to keep an eye onℱ the labor market. 

At a Commonwealth Club World Affairs of California event, Daly said the Federal Reserve could encounter several different economic scenarios as it continues to hold 澳洲幸运5开奖号码ꦗ历史查询:interest rates at decades-high levels, including a “soft landing” scenario where inflation falls without sending unemployment higher.

“We need t🔯o be ready to respond to however the economy evo💞lves,” Daly said. 

As 澳洲幸运5开奖号码历史查询:inflation data has shown that price pressures have begun to ease in 2024, Daly said Fed officials will also need to closely monitor the labor market, stressing that high interest rates are starting to have a big🍒ger impact on unemployment.

“Future labor markඣet slowing could translate into higher unemployment, as firms need to adjust not just vacancies but actual jobs,” Daly said. 

However, the 澳洲幸运5开奖号码历史查询:labor market so far remained strong, Da🦂ly said, which along with the progress on inflation made i🔥t unlikely that the U.S. economy would enter a period of stagflation where unemployment rises as inflation remains elevated. 

“We don’t see evidence that thoseꦍ, what I would call tail risks, are really in our future,” Daly said. “When you look at the inform🐽ation, you see an economy that is quite different from a stagflation economy.”

-Terry Lane

Goolsbee Sees Inflation Progress as Rents Cool

A cooling housing market could be good news for inflation, as central bankers will be looking for more signs rents are coming down, 澳洲幸运5开奖号𝐆码历史查询:Chicago Fed President Austan Goolsbee said in a CNBC interview on Monday.

His comments come ahead of the Friday release of the Personal Consump🔯tion Expenditures (PCE) price i🐟ndex, where officials and investors will be closely watching for signs that inflation is moving lower. 

“I take it as a good sign that market reactions are often biggest when the data comes out, not when we mꦗake statements. To me, that’s an indicator that we’re doing the communications the right way,” Goolsbee said.

For his part, Goolsbee said he was closely watching numbers from the housing market, and especially focusing on 澳洲幸运5开奖号码历史查询:inflation rates for rent, which have moved “significantly” lower b🍬ut haven’t yet shown up in inflation data🧸.

“There is still wide availability that housing♚ inflation can come down,” he said.

Goolsbee also said if unemployment continued 澳洲幸运5开奖号码历史查询:to trend higher and if consumer spending cooled, then Fed officials may begin to evaluate cutting interest ra𝔉tes. 

“If you’re go💫ing to b꧅e extra restrictive for too long then you’re going to start to have to worry about what’s going on with the real economy,” Goolsbee said.

-Terry Lane