Hotter-than-expected inflation readings have some Fed officials describing the path down to their 2% inflation target as “bumpy.”
New data due out Thursday morning will determine whether that picture is about to get bumpier.
Economists expect the Fed’s preferred inflation measure — the “core” Personal Consumption Expenditures (PCE) Index that excludes volatile food and energy prices — will clock in at 2.8% for the month of January on a year-over-year basis.
That would be a hair lower than the 2.9% year-over-year increase registered in December. But the month-over-month increase expected by economists is 0.4%, up from the 0.2% seen in December.
That could stoke fears that inflation is not moving down quickly enough. It could also bring the six-month and three-month annualized inflation numbers back above the Fed’s 2% target, according to Bank of America.
The new PCE reading is important for investors as they try to determine how quickly the central bank will begin loosening its monetary policy following the most aggressive campaign to cool inflation since the 1980s.
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