The U.S. central bank is not expected to cut interest rates until September.
The Federal Reserve’s preferred inflation measure inched closer to the U.S. central bank’s 2 percent target in April.
According to the Bureau of Economic Analysis, personal consumption expenditure (PCE) inflation slowed to 2.1 percent last month, from 2.3 percent in March. This is the lowest reading since September 2024.
Economists had anticipated a print of 2.2 percent.
Core PCE inflation, which omits the volatile energy and food prices, also eased to 2.5 percent in April from an upwardly adjusted 2.7 percent in the previous month.
Both PCE and Core PCE inflation edged up 0.1 percent monthly.
The narrower supercore PCE, which concentrates on core services excluding housing, dipped into negative territory from March to April.
The Fed prefers the PCE because it is updated more frequently and the basket of goods and services is broader than the Consumer Price Index (CPI).
“This PCE report confirms continued disinflation, despite the refrain from everyone that disinflation isn’t possible in this environment. As Alan Greenspan would have said, it’s a conundrum,” Jamie Cox, a managing partner for Harris Financial Group, said in a note emailed to The Epoch Times.
Additionally, U.S. government data indicate that personal income increased at a higher-than-expected pace of 0.8 percent in April, up slightly from 0.7 percent in March.
Personal spending inched higher by 0.2 percent, down from 0.7 percent.
The personal saving rate—personal saving as a percentage of disposable personal income—ticked up to 4.9 percent.
Market Reaction
U.S. stocks were in the red before the opening bell.
Investors ostensibly shrugged off the inflation numbers and focused more on President Donald Trump’s latest Truth Social post.
The president accused China of violating the trade agreement with the United States.
“Two weeks ago, China was in grave economic danger! The very high Tariffs I set made it virtually impossible for China to trade into the United States marketplace which is, by far, No. 1 in the World,” he said.
“The bad news is that China, perhaps not surprisingly to some, has totally violated its agreement with the United States. So much for being Mr. Nice Guy!”
By Andrew Moran
