Inflation cooled in March, but interest rates are expected to remain high.
Inflation cooled a little last month, but don't expect interest rates to drop as well.
Prices rose 2.3% in March, according to the latest personal consumption spending data released on Wednesday. This is 2.5% higher than the 2.5% month in February, but slightly higher than the forecast of 2.2%.
PCE is the Fed's preferred inflation scale.
These figures appeared this morning after the release of GDP data in March, which showed a 0.3% contraction in the first quarter. The contraction is mainly attributed to businesses and people “panic” imports before President Donald Trump's tariffs take effect.
However, consumer spending also slowed significantly in the first quarter, according to GDP reports. Resilient consumer spending helps the economy boost the economy amidst stubborn inflation and rising unemployment.
The latest data is still unlikely to change the Fed's interest rate next week, as it can monitor how tariffs and political unrest affect economic health. Experts expect the Fed to remain stable next week, just like since January, after lowering them twice last fall.
Fed Chairman Jerome Powell is under enormous pressure from the Trump administration to lower interest rates, although Trump supported Powell's threat after the stock market response last week.
