August PCE: The Fed’s favorite inflation scale shows

Federal reserve prefers Inflation scale It showed that inflationary pressures remained high in August, as policy makers seek to achieve a balance between the need to restore price stability in exchange for the weak labor market after reducing the interest rate last week.

The Trade Administration stated on Friday that Personal consumption expenses (PCE) The index rose 0.3 % in August a month ago and rose 2.7 % from last year. These numbers were in line with the appreciation of the Economists.

Core PCE, which excludes volatile measurements of food and energy prices, increased by 0.2 % on a monthly basis and 2.9 % on an annual basis. They both were in line with the expectations of economists.

Federal Reserve Policy makers focus on the main PCE number as they try to re -inflation to their long -term target of 2 %, although they look at the basic data as a better inflation indicator. The main PCE brand increased from 2.6 % in July to 2.7 % in August, while Core PCE is fixed at 2.9 % during that period.

What is the FBI’s view of interest rate discounts, inflation and jobs for the rest of the year?

Goods prices It rose 0.9 % in August since last year, and it accelerated from 0.6 % readings in June and July. The prices of durable goods were 1.2 % higher in August compared to last year, while non -beating goods increased by 1.2 % in that period.

Service prices increased by 3.6 % in August compared to last year, which was slightly higher than reading 3.5 % in July.

the Personal savings rate As a percentage of 4.6 % personal income in August, it decreased slightly from the reading of 4.8 % in the previous month.

The Federal Reserve reduces interest rates for the first time this year amid twice the labor market

The PCE report of the Ministry of Trade comes yet Federal Reserve Reducing interest rates last week for the first time this year, which reduced the rate of federal funds by 25 points although inflation remains much higher than the target rate of the central bank of 2 %.

Jerome Powell, head of the Federal Reserve, said at his press conference after implementation, that the high prices of customs tariffs could represent a single -time shift in the price level, or it may be a more stable inflation challenge. Powell added that the definitions began to influence inflation data.

“We have begun to see the prices of goods appear through high inflation, and in fact, the increase in the prices of goods represents most of the increase in inflation or perhaps all the increase in inflation throughout this year,” Powell explained. “These are not very significant effects at this stage, and we expect them to continue building throughout this year until next year.”

Powell said that although the Federal Reserve believes that the upward trend in inflation will be due to the high prices for one time, the central bank cannot take it as a Muslim by it.

“We cannot assume it. Nevertheless, our function is literally to make sure that this is what is happening, and we will do this job,” he said.

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