The Fed Was Forced to 'Whiten Its Eyes', Choice Inflation Readings Remain Rising!


The latest reading on the Fed's inflation pick shows prices continued to rise more than expected in March.

The core Personal Expenditure Index (PCE), which excludes food and energy costs and is closely monitored by the Federal Reserve, rose 2.8% from a year earlier in March, topping estimates at 2.7% and unchanged from the increase seen in the month February.

Compared to the previous month, core PCE rose 0.3%, in line with Wall Street expectations.

This reading was released as consistently high inflation reports dampened investor expectations for interest rate cuts by the Federal Reserve this year. Fed Chairman Jerome Powell has consistently reiterated that the Fed will not cut rates until it has "greater confidence" in the decline in inflation.

"The latest data clearly does not give us greater confidence and instead indicates that it will likely take longer than expected to achieve that confidence," Powell said on April 16.

Friday's reading on March PCE came after observations on the metric for the quarter surprised investors on Thursday. Data from the Bureau of Economic Analysis showed "core" inflation rose 3.7% from a year earlier in the first quarter, above estimates for 3.4% and well above the 2% gain seen in the previous quarter.

This worries investors. Treasury yields hit their highest level since November 2023, stocks slumped and investors lowered their bets that the Federal Reserve will cut rates this year.

The US dollar index, which measures the US dollar against six major currencies, traded up 0.22% to 105.675.