Inflation surges
Key Questions
What were the latest US inflation readings for April?
April CPI came in at 3.8% year-over-year with core at 2.8%, while PCE rose 3.5% overall and 3.2% on core. PPI reached 6% amid energy-driven spikes.
How is core inflation trending despite headline surges?
Underlying core measures show continued disinflation even as headline figures rose due to energy prices. This may keep the Fed on hold longer than expected.
What is BofA's forecast for May core PCE inflation?
Bank of America projects May core PCE at 3.3%, reflecting persistent pressures from recent data.
How are Middle East oil prices affecting inflation?
Oil above $111 is adding structural upward pressure on prices and complicating the Fed's policy path. This contributes to expectations of higher-for-longer inflation.
When does Morgan Stanley expect inflation pressures to peak?
The firm flags peak pressures in May and June due to energy and other factors influencing recent readings.
Why might the Fed hold rates steady amid rising inflation?
Core trends remain contained while headline spikes are seen as transitory energy effects. Officials remain focused on the Fed's preferred measures like PCE.
What do recent business surveys indicate about inflation expectations?
The Atlanta Fed's survey shows firms anticipating higher inflation in coming months. This aligns with broader concerns over sustained price pressures.
How does the PCE data influence Fed rate decisions?
As the Fed's preferred gauge, April PCE readings of 3.5% headline and 3.2% core suggest caution on easing. It supports views that rates may stay elevated.
Apr CPI 3.8% YoY, core 2.8%; Apr PCE +3.5%/+3.2% core; PPI 6%. Energy-driven headline spikes mask underlying disinflation; Fed may hold longer. BofA forecasts May core PCE 3.3%. ME oil >$111 adds structural pressure. Morgan Stanley flags peak pressures May/June.