US Fed’s preferred inflation gauge largely unchanged in February

US Fed’s preferred inflation gauge largely unchanged in February

It looks inevitable that tariffs are going to increase inflation in the near term, says Boston Federal Reserve president Susan Collins.

Earlier this month, the Federal Reserve voted to extend a pause in rate cuts, holding its key lending rate at between 4.25% and 4.50%. (EPA Images pic)
WASHINGTON:
The US Federal Reserve’s (Fed) preferred inflation measure was largely unchanged last month, according to government data published today, but a widely-scrutinised gauge of underlying price pressures rose.

The personal consumption expenditures (PCE) price index rose 2.5% in the 12 months to February, the commerce department said in a statement, unchanged from a month earlier.

Inflation rose 0.3% on a monthly basis.

Both measures were in line with the median forecasts from economists surveyed by Dow Jones Newswires and The Wall Street Journal.

But in more concerning news for Fed officials, an inflation measure stripping out volatile food and energy costs rose more than expected, by 0.4% month-on-month, and by 2.8% from a year ago.

US President Donald Trump has embarked on a stop-start rollout of country- and sector-specific tariffs, drawing condemnation from allies and warnings from Fed officials that the measures will likely push up prices.

“It looks inevitable that tariffs are going to increase inflation in the near term,” Boston Fed president Susan Collins – who has a vote on the US central bank’s rate-setting committee this year – said yesterday.

Earlier this month, the Fed voted to extend a pause in rate cuts, holding its key lending rate at between 4.25% and 4.50%.

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