April's inflation data is good news for the Fed: Economist

everybody step back let's take a bit of a breather here we're two hours into the trading day just a little bit over that let's do a check of the markets as we're taking a look at the Dow the S&P 500 and the NASDAQ the Dow was higher by about 2/10 of a percent the S&P 500 and the NASDAQ still in negative territory the Dow the worst performer on a percentage basis down about one and a quarter of a percent stocks are mixed after pce personal consumption expenditures came in in line with expectations for the month of April the data shows inflation slowed in April so what does this all mean for you and your money here with more we've got Kathy BOS jansik who is the Nationwide Chief Economist and Senior vice president Kathy thanks so much for sticking around and hanging tight as we had some uh breaking news to cover here but we've also got the breaking economic data that came out this morning giving us a little bit more sense of where inflation sits I want to get your evaluation of it yeah now happy to be with you um so I think overall the the data show that we had moderation in economic activity and inflation in April and and really both welcomed and the flation particularly as you mentioned you know the core uh reading there of the personal consumption expenditure price index um the core reading was up just 210 of percent that's a really welcomed um outcome especially since we saw much higher readings um in the first quarter so you know the the it's not enough to maybe give the FED a confidence at this point yes we're going to be able to cut rates later this year but it's certainly welcome news to see a little bit of relief there um and on the consumer spending and income front when you adjust for inflation um both were negative so some moderation it doesn't mean the economy is tanking far from it um but it does show some moderation which again in the big picture this is good news because the Federal Reserve wants slightly slower economic activity for inflation to Trend lower um you know going forward where do you believe that core pce inflation needs to fall to in order for the fomc to feel comfortable with cutting rates yeah great question so I was looking um ahead of the data you know what was the Federal Reserve assuming like the the fourth quarter year on-year rating would be you know of the year so ending the year they thought well we'd be at 2.4% um the the problem is we're we're we're above that now and because the month the year- ofe comparisons aren't all that favorable meaning we have to have really low readings going forward to hit that 2.4% um rate uh meaning probably get two10 and then for the coming months and then August through December you'd have to have one tenth per month now it's possible but it it's really a high hurdle um so I think that's why three rate cuts which what they had when they published that inflation forecast are off the table but we could still get two or or one Cuts if fed officials believe we're like securely heading in the right direction and eventually get back to 2% Kathy Bon shanic who is the Nationwide Chief Economist and Senior vice president Kathy thank you so much for helping us break down some of this morning's data and a read on the economy appreciate it

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Length: 3min 29sec (209 seconds)

Published: Fri May 31 2024