The personal consumption expenditures (PCE) price index, the inflation index that the Federal Reserve uses, is projected at an annual rate of 6% in January, according to economists surveyed by Bloomberg. The core rate, which excludes food and fuels, is forecast to climb to an annualized 5.2%.
The PCE index was up 5.8% year over year in December. The core rate was up 4.9% year over year in December.
Bond traders are just coming to a belief that the Fed won’t raise interest rates by 50 basis points at its March 16 meeting with odds falling to just 15% in favor of the 50 point move. The market remains convinced that the Fed will raise rates in March.
A PCE number significantly above current projections might swing the pendulum back toward a 50 basis point increase in interest rates.
The PCE report is scheduled to be released Friday, February 25, before the stock market opens for trading.
