The Federal Reserve’s preferred inflation measure, the PCE index, is expected to show minimal growth of just 0.1% in April, potentially bringing the annual inflation rate down to 2.2% – close to pre-pandemic levels.
While this appears to be good news as the Fed aims to return inflation to 2% or less, concerns remain about the impact of new tariffs and whether inflation expectations have become “unanchored.”
A recent court ruling against Trump’s tariff authority offers some hope, but economists warn that rising import prices could reignite inflation, similar to the persistent inflation cycles of the 1970s.