WASHINGTON: The US Federal Reserve’s favored measure of inflation slowed substantially last month, providing relief to the US central bank as it mulls another interest-rate hike next week to tackle rising prices.
The annual personal consumption expenditures price index (PCE) eased to 4.2 percent in March from a revised 5.1 percent a month earlier, with a sharp decline recorded in energy prices, according to data released Friday by the Bureau of Economic Analysis.
The US central bank has raised interest rates nine times in quick succession since March last year in a bid to control rising prices, and is weighing up whether or not to do so a tenth time next week.
The vast majority of futures traders predict it will opt to raise its benchmark lending rate by a quarter-point on Wednesday, according to data from CME Group.
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The Fed has been closely watching PCE inflation for signs that its aggressive campaign of interest-rate hikes to bring inflation back down to its long-term target of two percent is working.
Although annual PCE eased significantly, core PCE, which excludes volatile food and energy costs, only slowed slightly last month to 4.6 percent from a revised 4.7 percent in February.
At its recent rate decision, Fed chair Jerome Powell suggested the central bank may only raise rates once more and then bring its current hiking cycle to a halt.
On a month-to-month basis, the PCE price index rose by 0.1 percent from February to March.
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