The Federal Reserve's preferred inflation gauge showed prices remained sticky in July, reinforcing division within the central bank on whether to raise interest rates as policymakers gather this week for their annual economic symposium in Jackson Hole, Wyo.
While prices remained sticky year over year, month-over-month data pointed to a slowdown, a positive signal for those who are content to hold interest rates steady, though it's unlikely to quiet the hawks.
The Personal Consumption Expenditures (PCE) index rose 3.3% in July on a "core" basis, which excludes volatile food and energy prices. That was in line with expectations and the same level as June. Month over month, prices rose 0.2%, also in line with expectations and up from 0.1% in June.
The monthly increase suggests inflation is rising at a mild rate. New York Fed president John Williams has said that if inflation on a monthly basis, as measured by PCE, comes in at 0.2% or lower, that would indicate inflation is coming back down to the Fed's 2% target on its own, implying the Fed would not need to raise rates.
Boston Fed president Susan Collins said Tuesday that she was content to hold rates steady at the last meeting, but she would need to see evidence that inflation is dropping to continue holding rates.
#rates
While prices remained sticky year over year, month-over-month data pointed to a slowdown, a positive signal for those who are content to hold interest rates steady, though it's unlikely to quiet the hawks.
The Personal Consumption Expenditures (PCE) index rose 3.3% in July on a "core" basis, which excludes volatile food and energy prices. That was in line with expectations and the same level as June. Month over month, prices rose 0.2%, also in line with expectations and up from 0.1% in June.
The monthly increase suggests inflation is rising at a mild rate. New York Fed president John Williams has said that if inflation on a monthly basis, as measured by PCE, comes in at 0.2% or lower, that would indicate inflation is coming back down to the Fed's 2% target on its own, implying the Fed would not need to raise rates.
Boston Fed president Susan Collins said Tuesday that she was content to hold rates steady at the last meeting, but she would need to see evidence that inflation is dropping to continue holding rates.
#rates
25 days ago
