The US Federal Reserve’s preferred measure of inflation, the personal consumption expenditures (PCE) price index, rose less than expected last month, fueling hopes that the central bank’s aggressive rate hikes over recent months have helped ease price pressures.
The headline PCE price index rose 0.3% during February, below the expected 0.4%. For the 12 months to February, it rose 5%, below the 5.2% estimate.
This marked a slight cooling from January when the headline PCE increased by 0.6% monthly and 5.4% annually.
The core PCE, which excludes food and energy, rose 0.3% month-over-month and at an annual rate of 4.6% in February.
FOREX.com market analyst Fiona Cincotta noted that the latest PCE data unexpectedly cooling was fueling optimism that peak interest rates could be near.
“Things are moving in the right direction for the Fed but at a painstakingly slow pace,” she said. “The data comes after the markets had scaled back rate hike bets as the banking crisis unfolded and priced in a pause by the Fed in the May meeting and two rate cuts by the end of the year.”
Cincotta said in line with less hawkish Fed bets, stocks were rising and the USD had eased.
Stock futures were in positive territory following the release of the data, with the Dow Jones up 0.3%, the S&P 500 up 0.2%, and the Nasdaq up 0.1% in pre-market trading.
“US indices are set to book strong gains across the week with the S&P 500 on course for its best week since January,” Cincotta said.
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