Friday, March 31, 2023

The private consumption deflator in the US fell to 5%. What will the FED do?

In the previous year, the prices of goods increased by 4.6% while the cost of services increased by 5.2%, while food prices increased by 11.2% and energy prices by 6.9%.

Goods prices decreased by 0.7% compared to November’s level, while services became more expensive by 0.5%. Food prices rose 0.2%, and energy costs fell 5.1%.

In addition, personal income increased by $49.5 billion (+0.2%) in December, and disposable personal income increased by $49.2 billion (+0.3%). On the other hand, personal consumption expenditure decreased by 41,600 million, showing a decline of 0.2%.

in monthly terms, The general index rose 0.1%, while the core index, which excludes food and energy for its calculation, rose 0.3%. The underlying PCE is one of the Federal Reserve’s (Fed) favorite indicators, and one of the ones that most influences its monetary policy decisions. In fact, the data we learn today will be crucial in the decision we make next week. In fact, “data in line with or better than expected, we believe will be very well received by both bond and equity markets, as they will clearly support the inflation hypothesis with a downward trend,” They say in Link Securities.

The next meeting of the body headed by Jerome Powell will be held on February 1 at a time when the market is believing that The Federal Open Market Committee (FOMC) of the Federal Reserve is going to slow down the process of raising interest rates again., up to 25 basis points. However, they say at the broker, “Following a battery of macro data recently released in the US that showed an economy that continues to resist both inflation and rate hikes, as well as a highly stressed labor market, the Fed To “surprise the markets once again by raising its rates by half a percentage point, something very few investors are currently considering.” Whatever the FOMC does next week, the reality is that the strength of the US economy gives the Fed some leeway to tighten further. financial terms.

Nation World News Desk
Nation World News Desk
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