Federal Reserve's Inflation Gauge Shows Persistent Inflation Pressures
The Personal Consumption Expenditures (PCE) index, excluding food and energy, increased by 0.2% in December, meeting economists' forecasts. The annualized rate of core inflation remained at 2.8%, above the Fed's 2% target.
Overall PCE rose by 2.6% on a yearly basis, up from 2.4% in November.
"Inflation remains somewhat elevated relative to our 2 percent longer-run goal," Fed Chair Jerome Powell said after the Fed's meeting on Wednesday.
Economists believe the Fed is awaiting more inflation data and clarity on trade developments. President Trump has proposed a 25% tariff on imports from Mexico and Canada, which could further elevate inflation.
The Fed held interest rates steady at its most recent meeting, ending a cycle of rate cuts. Economists expect the Fed to stay on hold for the time being, monitoring inflation and trade developments.