Federal Reserve Leaves Interest Rates Unchanged Amid Inflation Concerns
The Federal Reserve has announced that it will keep interest rates unchanged, citing concerns over inflation. The Fed’s preferred inflation gauge, the personal consumption expenditures (PCE) index, showed prices rose 0.3% in December and 2.6% on an annual basis, exceeding the central bank’s target level of 2%.
The PCE index, which excludes volatile food and energy prices, rose 0.2% for the month and 2.8% from a year ago, in line with estimates. Federal Reserve policymakers are focusing on the PCE headline figure as they try to slow the pace of price increases to their target of 2%, although they view core data as a better indicator of inflation.
Headline PCE ticked higher from an annual rate of 2.4% in November to 2.6% last month, while core PCE has been at 2.8% for three consecutive months. Goods prices were flat in December, while prices for services rose 3.8% from a year ago. Food prices were up 1.6% last month compared with a year ago, while energy prices were down 1.1% during that period.
Wages and salaries were up 0.4% in December compared with the prior month, a slight deceleration after October and November both saw wage and salary growth of 0.5%. The personal savings rate as a percentage of disposable income was 3.8% in December, declining from 4.3% in October and 4.1% in November.
