US FED’s Preferred Inflation Measure Released, Rises 0.2%

Paigambar Mohan Raj
Source: Errante

The U.S. Federal Reserve has released the latest data on the Personal Consumption Expenditures Price Index (PCE) for November. The PCE is the Fed’s preferred inflation measure. In accordance with expectations, the core personal consumption expenditures price index, or PCE deflator, increased 0.2% in November and 4.7% from a year earlier. The results will likely have an impact on stock and crypto markets. The data comes in one hour before markets open. How the market reacts to the results, is yet to be seen.

As per the data, inflation seems to be slowing down. The news comes a breath of fresh air to investors who have been on the edge of their seats.

Following the Fed’s final policy announcement of 2022, strategists noted that the policymakers’ higher adjustment of their core PCE predictions to 3.5% from 3.1% by the end of 2023 was the most unexpected data point among economic projections. Moreover, the core PCE inflation goal for 2022 was increased by the FED from 4.5% to 4.8%. To hit the FED’s objective of 4.8%, the monthly percentage change in inflation would have to be absurdly high. However, the numbers have come in just shy of the FED’s target.

The lower-than-expected CPI (Consumer Price Index) numbers earlier this month gave a slight relief to crypto and stock markets. However, the PCE numbers provide the final clues for investors as we enter 2023. With a lower-than-expected result, investors will likely breathe a sigh of relief.

Both stock and crypto markets have taken a beating over this past year. However, with the final economic numbers in, investors can make calculated judgments on how to begin the new year.

As we bid goodbye to what can be called one of the worst years for crypto and global finance, many are optimistic about what 2023 will bring. However, the economic lump is far from over. The FED has set its inflation target of 2%, which is yet to be achieved.