Economists set 2.8% core inflation concern threshold for Fed

The Federal Reserve’s preferred inflation gauge must reach a peak of 2.8% to rattle policymakers in the United States. This expectation was from a Reuters poll, which also suggested that the central bank might retain its current policy rates for three months before implementing any changes.

The core personal consumption expenditures (PCE) price index recorded a 1.8% increase. The reading came as the highest since February 2020. According to the median expectation of 41 economists, the index needs to hit 2.8% to bring in some pressure for the Fed.

Meanwhile, stocks dropped as Treasury yields gained on Wednesday. This followed after U.S. consumer prices surprisingly advanced to their sharpest level in nearly 12 years ended April. This, in turn, prompted policymakers to tighten rates.