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 monthꦍs, 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 goal 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 hot 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官方开奖结果体彩网:stagflation,” though centra🦄l bankers do need to keep an eye 🤡on 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官方开奖结🦂果体彩网🧸:interest rates at decades-high levels, including a “soft landing” scenario where inflation falls without sending unemployment higher.

“We need to be ready to respond to howev💃er the economy evolves,” Daly said. 

As 澳洲幸运5官方开奖结果体彩网:inflation data has shown tha🌠t price pressures have begun to ease in 2024, Daly said Fed officials will also need to closely monitor the labor market, sᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚtressing that high interest rates are starting to have a bigger impact on unemployment.

“Future labor market slowing could translate into higher unཧemployment, a🌄s firms need to adjust not just vacancies but actual jobs,” Daly said. 

However, the 澳洲幸运5官方开奖结果体彩网:labor mark💫et so far remained strong, Daly said, which along with the progr💃ess on inflation made it unlikely that the U.S. economy would enter a period ꦅof stagflation where unemployment rises as inflation remains elevated. 

“We don’t see evidence that those, what I would call tail risks, are really in our future,” Daly said. “When you look at the information, 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ꦉ运5官方开奖结果体彩网:Chicago Fed President Austan Goolsbee said in a CNBC interview on Monday.

His comments come ahead of the Friday release of the Personal Consumption🐷 Expenditures (PCE) price index, where offi🌸cials and investors will be closely watching for signs that inflation is moving lower. 

“I take it as a🐓 good sign that market reactions arꦰe often biggest when the data comes out, not when we make 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官方开奖结果体彩网:inflation rates for rent, which have moved “significantly” lower b🦂ut haven’t yet shown up in inflation dat🙈a.

“There is still wide availability that housing inflation c💫an come down,” he said.

Goolsbee also said if unemployment continued 澳洲幸运5官方开奖结果体彩网:to trend higher and if consumer spending cooled, then Fed officials🐠 may begin to evaluate cutting interest rates. 

“If you’re going to be extra restrictive for too long then you’re going to start tꦗo have to worry about what’s going on with the real economy,” Goolsbee said.

-Terry Lane