U.S. Fed’s closely watched inflation measure rises 2.4 pct in January

The U.S. Federal Reserve left interest rates unchanged at a 22-year high of 5.25-5.5 percent as inflation continued to cool, while avoiding the signal of an imminent rate cut going forward.

WASHINGTON, Feb. 29 (Xinhua) -- The U.S. personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation measure, rose 2.4 percent in January, as inflation continued to cool amid high interest rates, the Commerce Department reported on Thursday.

The latest figure came after the measure in October slowed to 3.0 percent year on year from 3.4 percent in September, before slowing to 2.7 percent in November and then to 2.6 percent in December, according to the Commerce Department’s Bureau of Economic Analysis.

The PCE gauge takes into account how consumers change their behavior in light of higher prices, and is a broader measure of consumer behavior than the Consumer Price Index (CPI).

The so-called core PCE price index, which strips out volatile food and energy prices, rose 2.8 percent in January from a year ago, down from 3.2 percent in November and 2.9 percent in December, but still well above the Fed’s inflation target of 2 percent.

Twelve-month core PCE inflation peaked at 5.6 percent in February 2022.

At its latest policy meeting on Jan. 30-31, the U.S. Federal Reserve left interest rates unchanged at a 22-year high of 5.25-5.5 percent as inflation continued to cool, while avoiding the signal of an imminent rate cut going forward.

"Inflation is still too high, ongoing progress in bringing it down is not assured, and the path forward is uncertain," Fed Chair Jerome Powell said.

Powell said reducing policy restraint "too soon or too much" could result in a reversal of the progress on inflation, and ultimately require even tighter policy to get inflation back to 2 percent.

At the same time, reducing policy restraint "too late or too little" could unduly weaken economic activity and employment, he added.