July 25, 2024

Slowing of Fed’s preferred price gauge strengthens argument for rate cut

The Federal Reserve’s preferred gauge of underlying US inflation slowed down in May, adding support for potential interest rate cuts later this year. Meanwhile, consumer spending bounced back following a decline in April, and incomes experienced strong growth, indicating a possible easing of price pressures without significant harm to consumers.


Q: What is the Federal Reserve’s preferred measure of inflation?

A: The Federal Reserve uses the personal consumption expenditures (PCE) price index to gauge underlying inflation.


The recent data on inflation, consumer spending, and income growth suggest that the US economy may be able to navigate through potential price pressures with the support of interest rate cuts. This is a positive sign for consumers and the overall economic outlook.

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