HomeFinance NewsEconomyInflation Shocker: Key Fed Measure Surprises, Sending Wall Street into a Panic

Inflation Shocker: Key Fed Measure Surprises, Sending Wall Street into a Panic


Key Fed inflation measure rose 2.8% in March from a year ago, more than expected


Inflation remained persistent in March, with key measures showing elevated price pressures.

The personal consumption expenditures price index, excluding food and energy, increased 2.8% year-over-year, exceeding forecasts.

This indicates that inflationary concerns are still prevalent despite economic uncertainty.

However, the situation is not dire.

While inflation remains high, it has not spiked as some had feared.

As a result, markets reacted with moderate stability, although Treasury yields decreased and traders became slightly more optimistic about potential rate cuts later this year.

Consumers continued to spend in March, with personal spending rising 0.8% monthly.

However, this spending came partly from savings, as the personal saving rate declined to 3.2%.

Despite the recent inflation data, the Federal Reserve is unlikely to change its stance on interest rates in the short term.

The central bank closely monitors inflation trends and aims for a 2% target inflation rate.

However, core PCE inflation has remained above this target for the past three years.

The Fed considers the core PCE price index, which excludes food and energy, a reliable indicator of longer-term inflation trends.

In March, this index rose 2.8% year-over-year, indicating that inflationary pressures are still significant.

Services prices, such as travel and hospitality, increased 0.4% monthly, while goods prices rose only 0.1%.

Food prices declined slightly, but energy prices rose 1.2%.

Over the past year, services have experienced a 4% price increase, while goods have remained relatively stable.

In summary, while inflation persists, the situation is not critical, and the Federal Reserve is maintaining its stance on interest rates.

Consumers continue to spend, dipping into savings to maintain their purchasing power.

However, it is too early to predict when significant changes in monetary policy might occur.

  • Overall sentiment: neutral
  • Positive

    “Markets showed little reaction to the data, with Wall Street poised to open higher.”

    “Treasury yields fell, with the benchmark 10-year note at 4.67%, down about 0.4 percentage point on the session.”


    “Inflation showed little signs of letting up in March, with a key barometer the Federal Reserve watches closely showing that price pressures remain elevated.”

    “The report follows bad inflation news from Thursday and likely locks the Fed into holding the line on interest rates likely through at least the summer unless there is some substantial change in the data.”

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