The trimmed-mean PCE inflation rate for April was an annualized 3.0 percent. According to the BEA, the overall PCE inflation rate for April was 5.9 percent, annualized, while the inflation rate for PCE excluding food and energy was 3.0 percent.
The following table summarizes the Dallas data:
Flat out, the continued upward drift in core measures, anyway you measure them, cannot be welcome. However, the fact that the news was about what people expected seems to have had a calming effect. From MarketWatch:
"The as-expected data should be a mild negative for the U.S. dollar in that it does not make the case that inflation pressures are rising, but rather remain contained," said traders at Gain Capital. "In this sense, the picture is developing very much along the lines of the Fed's forecast, suggesting that a pause is still the preferred scenario."
However, the fact that the year-over-year number is "just over the Fed's comfort zone" is "slightly dollar-positive. But the bond market didn't seem to think so," said Action Economics' Simpson.
The PCE reading "is fairly neutral," he said. "This one piece of data is not going to determine what the Fed does at its next meeting."
Which means, I think, that everyone walked away from the report believing just about what they believed before the report. From the Wall Street Journal:
...We continue to think that the FOMC will see the inflation as a lagging result of earlier strength in economic activity and will probably choose to stand pat. But, of course, there is still a month's worth of data yet to go.
--Goldman Sachs Economic Research...As long as inflation expectations remain "contained" this acceleration can be written off by the Fed as a temporary pass through of higher energy prices and not necessarily prompt a significant change in strategy.
-- Morgan Stanley Fixed Income Economics...... I expect the FOMC will pause in June.
--Naroff Economic Advisors Inc.These data are consistent with our view that the FOMC will pause at its upcoming June 28/29 meeting in order to further assess the economic landscape....
-- Joshua Shapiro, MFR Inc.
And in the other corner:
Core PCE prices are rising at even faster annualized rates of 2.3% and 3.0% over the last six and three months, respectively. These inflation data do not, in our judgment, support the view of a pause at the June FOMC meeting.
--Bear Stearns U.S. Economics...With a low likelihood of precipitous slowdownand emerging signs that core inflation and inflation expectations may be creeping higher, the Fed will likely hike the federal funds rate again at the end of June...
--Peter Kretzmer, Bank of America...These data add weight to the argument that GDP growth is still strong enough and inflation is still threatening enough to cause the Fed to raise interest rates further.
--Peter Morici , University of Maryland
Have a nice weekend.
Note: This is a revised version of the original post, which was altered to some formatting problems.