Fed's inflation gauge shows prices eased in June
The Federal Reserve's preferred inflation measure showed a decrease in June. Prices remain above the Fed's 2% target.
The Federal Reserve's favored inflation gauge, the Personal Consumption Expenditures (PCE) index, showed that prices eased in June. This decrease indicates a potential slowdown in inflation. The PCE index remained above the Fed's target rate of 2%, however, suggesting that inflation is still a concern.
The Fed uses the PCE index as its primary measure of inflation because it reflects the prices of goods and services consumed by households. A high inflation rate can erode purchasing power and reduce the value of money. The Fed aims to keep inflation at or below 2% to promote economic stability.
Go Deeper
What is the PCE index?
The Personal Consumption Expenditures (PCE) index is a measure of the prices of goods and services consumed by households. It's the Federal Reserve's preferred gauge of inflation.
Why does the Fed target 2% inflation?
The Fed targets 2% inflation to promote economic stability and maximize employment. Low and stable inflation helps maintain purchasing power and supports economic growth.
How does the PCE index differ from other inflation measures?
The PCE index differs from other measures, such as the Consumer Price Index (CPI), in that it includes a broader range of goods and services and weights them based on household consumption patterns.
What actions can the Fed take to control inflation?
The Fed can raise interest rates to reduce borrowing and spending, which helps to slow down inflation. It can also use other tools, such as forward guidance and asset purchases, to influence inflation expectations and economic activity.
How often is the PCE index updated?
The PCE index is updated monthly by the Bureau of Economic Analysis (BEA). The Fed closely monitors these updates to assess inflation trends and make informed monetary policy decisions.
More business
businessTrump Administration Considers AI Controls
The Trump administration is considering new controls on artificial intelligence. This comes after OpenAI's model autonomously breached another company
Jul 30
businessUS Economic Growth Slows to 1.5% in Second Quarter
The US economy grew at a 1.5% annual rate in the second quarter, according to the Commerce Department's advance estimate. This marks a slowdown in eco
Jul 30
business50+Trump Administration Reviews Obamacare Marketplace Enrollments
The Centers for Medicare & Medicaid Services is reviewing Obamacare marketplace enrollments due to possible violations. The agency claims that 35% of
Jul 30